All posts in “ICOs”

Twitter is suspending some users who solicit crypto

Twitter is taking some steps to combat cryptocurrency scammers on its platform. But these are best classified as ‘baby steps’ at this point.

The company does not currently have a specific ad policy relating to cryptocurrency and ICO related ads — which Facebook banned in January.

“We allow ads that don’t violate the Twitter Advertising rules,” was the response from a Twitter spokesman when we asked about its policy towards crypto and ICO ads.

Its current policy includes prohibitions on:

  • Ads for products or services that are potentially unsafe or deceptive
  • Ads making misleading or deceptive claims, such as “get rich quick” offers

Twitter also notes there can be country-specific restrictions on financial services.

Yet earlier this month, Australian news site ABC News reported that local Twitter users were being inundated with ads for Initial Coin Offerings and cryptocurrency exchanges.

At the same time, many global regulators have issued public warnings about the risks of investing in ICOs.

Some regulators have banned them entirely.

And the crypto market is essentially characterized by misleading and deceptive claims at this point — given the lack of clear and firm regulation.

So Twitter’s continued acceptance of ad dollars from cryptoland looks pretty hard to square with its own ad policy at this point.

What it is doing to mitigate crypto scamming appears to be a more subtle policing of Twitter users who send tweets that contain targeted requests to others to send crypto.

Reuters reports that an account posing as Elon Musk, which had last month targeted followers of the billionaire and claimed to be giving away cryptocurrency, was suspended as of yesterday.

“We’re aware of this form of manipulation and are proactively implementing a number of signals to prevent these types of accounts from engaging with others in a deceptive manner,” a Twitter spokesperson told the news agency.

The spokesman declined to provide us with any more information about its actions or the kinds of issues it’s tackling in the crypto area.

But a tweet sent as a joke by a friend of a TechCrunch colleague — asking him to “send me 0.6-3.0 eth and a press release and get back a press release you can pretend is real press” — resulted in this Twitter user’s account being briefly suspended.

At the same time, after searching for all of two seconds, we found what is clearly a fake account (screengrabbed below) posing on Twitter as the Telegram Open Network, and soliciting “1 to 5 ETH” to “become a part of the 3rd “A” pre-ico sale”.

At the time of writing this account remains online.

Perhaps it’s avoided suspension to date because it’s still fairly new (created: February 2018) but also because it has not yet attempted to directly and publicly solicit crypto from other Twitter users (by @-ing them).

Though this Twitter account could still be linked through to in forums or on other platforms to try to trick people into sending ether. Aka: A scam.

While scams involving fake accounts directly asking people to send crypto are clearly one problem in the crypto space — and it’s good that Twitter is trying to crack down on this type of behavior — it is merely the tip of the massively scammy iceberg where crypto/ICOs are concerned.

Entire ICOs have turned out to be scams. Obscure crypto exchanges have been hacked and drained of millions. Consider also the disinformation-fueled crypto pump and dump scams that seek to capitalize on crypto volatility at the expense of people getting duped.

And Twitter clearly remains a great platform for spreading #ICO ‘news’.

A quick glance at hashtags like #tokensale, #tokenlaunch and #ICO shows there’s still near unlimited bandwidth for promo-ing your (entirely unregulated) crypto activity on Twitter.

In a blog post last fall Twitter’s own head of global financial data partnerships, Jared Podnos, lauded the rise of cryptocurrency conversation on the platform, writing: “Over the last year, we’ve seen the cryptocurrency conversation on Twitter grow at unprecedented rates.”

He embedded the below graph:

He also made the wild claim that as “rumors run wild, Twitter is the place to stay informed”.

A statement that also looks incompatible with the platform continuing to accept crypto ads where there’s zero guarantees such an ad isn’t actually a scam trying to run wild.

Twitter did recently announce a welcome crackdown on bots — aimed at preventing trivially easy amplification of malicious activity.

It’s also now talking about wanting to encourage healthier public conversations and interactions.

Dumping crypto ads when the space remains so beset with scams and (at best) unregulated claims seems the very least it could do.

TechCrunch’s Jon Russell contributed to this report

David Sacks’s new startup wants to make it safer for old-guard industries to jump into crypto

SEC chairman Jay Clayton made clear today that his agency, along with the Commodity Futures Trading Commission, remains acutely concerned about initial coin offerings and cryptocurrency trades. In fact, toward that end, they’d like more expansive powers when it comes to protecting customers on cryptocurrency exchanges from fraud.

“When you have an unregulated exchange, the ability to manipulate prices goes up significantly,”  Clayton told the Senate Banking Committee earlier today.

Clayton’s testimony is pretty convenient timing for Harbor, a new blockchain technology company that just raised $10 million from an interesting group of investors, including Chicago-based Valor Equity Partners; the real estate tech-focused venture firm Fifth Wall Ventures; the Dubai venture firm Vy Capital; and Craft Ventures, a new venture fund created by serial entrepreneur David Sacks — who also helped incubate Harbor.

Broadly speaking, what Harbor claims to do is protect issuers and investors by making it easier for them to operate in accordance with securities, tax and other regulations when issuing and trading crypto-securities.

But Harbor isn’t looking to cater to the types of decentralized file storage startups we’ve seen raise money through token sales. It’s chasing what many see as the next wave of issuers and investors — people  from old-guard institutions like real estate and venture capital and private equity who want in on the game.

Harbor might work, for example, with a company that owns and operates commercial properties and that regularly issues real estate securities like bonds or stock in a building, but which also needs to deal with complex legal stuff, like tax withholdings and minimum investor requirements.

How it all works is a bit complicated, but according to Harbor co-founder and chief product officer Arisa Amano, Harbor’s first project is what it’s calling the Regulated Token (or “R-Token”) Standard, an open-source project that addresses the compliance problem for secondary trading.

It’s built on the token standard ERC-20, which is widely supported by the existing Ethereum ecosystem. And the R-Token Standard ostensibly provides an interface that embeds compliance at the token level and can be implemented in a way that ensures that specified requirements like investor caps and holding periods are met before a trade is approved. (When a trade is requested, the R-Token checks with an on-chain regulator service to make sure that the investor has been verified and the trade meets all the legal requirements.) The token will throw off an error message otherwise and won’t transfer.

Amano says the R-Token Standard can enforce compliance across any trading platform that supports ERC-20 tokens. She adds that it enables tokens to trade everywhere, in centralized and decentralized exchanges, all over the world. For good measure, Amano reminds that “as the number of tokens and exchanges increase, the ability to apply compliance across trading platforms and jurisdictions will become increasingly necessary.”

It’s hard to dispute that last observation. Whether Harbor is the platform to which its target customers turn is another question.

It’s certainly easy to see the appeal of its founding team, which is very much threaded together by Sacks. Amano and co-founder Bob Remeika worked for Sacks at his earlier company, Yammer. They then joined Zenefits as VPs during Sacks’s short stint as CEO of the formerly high-flying HR software company. When Sacks decided to leave Zenefits and hand off the reins to someone else, they both hightailed it out the door behind him.

While Amano has taken the title of chief product officer, Remeika is the company’s chief technology officer. Meanwhile, Sacks’s title is co-founder and chairman. What the nine-person company still lacks, interestingly, is a CEO. One guesses that with its newly raised round  and the founding team’s pedigree, that won’t be the situation for long.

Indiegogo now lets you fund via token sale

Crowdfunding service and Kickstarter-competitor Indiegogo is now offering an ICO service alongside its partner, MicroVentures. The company will allow users to participate in SEC-complaint ICOs and, like its slow-burning equity crowdfunding service, will pick and choose startups that match certain exacting criteria.

These tokens sales will be SEC complaint and the sales are performed within current SEC regulations. Their first client, a fan-controlled football league, is in pre-sales now.

“Our ICO service is designed to allow the maximum number of investors to participate in ICO token pre-sales and sales,” said Slava Rubin, Indiegogo Founder and Chief Business Officer. “We believe cryptocurrency and blockchain technologies constitute an important step towards democratizing finance and introducing new levels of utility and liquidity to fundraising instruments. We want to make ICOs accessible to everyone, not just accredited investors.”

Companies can apply to sell their token on a new website and will receive guidance from MicroVentures to keep them on the right side of SEC guidance.

Rubin said that Indiegogo was well-placed to run ICOs thanks to their global reach and compliance skills.

“We have 10 million monthly users and reach people in 232 countries and territories. We can amplify token sales to a broad community of accredited and non accredited investors,” he said. “When we launched equity crowdfunding in 2016, we partnered with a FINRA registered broker dealer called Microventures. This partnership allows us to navigate the various securities and other relevant laws and maintain a strict level of compliance for token sales. Token sellers value this because the laws governing token sales are still evolving and we’re able to conduct sales and pre-sales in compliance with the relevant laws.”

Don’t expect to hop on, press a button, and immediately fund your potato salad token, however.

“Due to curation, they can be sure their token sales will be in good company,” he said.

Two global investors will talk token sales at Disrupt Berlin

Token sales, also called ICOs, are the new normal when it comes to early stage cash. Originally envisioned as a way to create new and unique rails for payments, customer interaction, and peer-to-peer networking the token is now both an integral part of most companies and a great way to fund a great (or awful) idea.

This year at Disrupt Berlin we’ll be joined by Zoe Adamovicz of Neufund and Kavita Gupta of Consensys. Both of these folks are seasoned blockchain investors with millions at their disposal and they’ll be talking about how investors should sail the rocky shoals of regulation, how token sales are changing the way VCs interact with companies, and how these tools will change in the future.

Token sales are here to stay but they will morph. In this Disrupt panel we’ll discuss what that means to startups, investors, and most important, the world.

Get your Disrupt tickets right now to save 30 percent off of your tickets and meet luminaries in the token space. You’ll also see the Startup Battlefield competition, in which a handful of startups pitch our judges with the hopes of winning the coveted Disrupt Cup and a cash prize.

You’ll get to chat with plenty of promising startups in Startup Alley, see amazing talks on the main stage, and unwind after a long day at the show with a cocktail and some new friends at the Disrupt after party.

Do you run a startup? The Startup Alley Exhibitor Package is your best bet to get the greatest exposure by exhibiting your company or product directly on the Disrupt Berlin show floor.

YC wants to let people invest in its startups through the blockchain

ICOs — or initial coin offerings — are emerging as a route for startups to raise money from a wide pool of investors through cryptocurrency networks. Now, one of the biggest and best-known accelerators in the world is mulling a way to use cryptocurrency networks and the blockchain to help get more people involved in backing their cohorts, according to its president.

“We are interested in how companies like Y Combinator can use the blockchain to democratize access to investing,” said Sam Altman, who leads the accelerator, onstage at Disrupt yesterday. “We should try to figure that out.”

Our sources tell us YC is actually a little further along than that. Like a growing number of venture groups that are jumping into the digital currency world, the group is actively sussing out how it might use cryptocurrency to expand the investment pool. There are still legal and other details that are being examined, the sources say.

Speaking at the TechCrunch Disrupt conference in San Francisco, Altman actually painted a mixed picture of the role of ICOs in the tech world today. It wasn’t all good.

Altman highlighted how there are still a lot of questions to be resolved about how they work — including whether they are transparent, and legal, and effective. Counterbalanced with that is a very strong current of hype.

“I think ICOs are definitely a bubble right now,” he said, “but there is something underlying them, which is why smart people are fascinated.”

He also made a case for why there should be more government involvement in how ICOs are run.

“Do I think ICOs are silly, bordering on scams? Yes, they are,” he continued. “But, there are a few that are important, and the blockchain is more important than not… ICOs need to be regulated.”

The idea of using a new investment format — one that would potentially open up YC to a much wider pool of backers — wouldn’t necessarily represent a big shift for YC, which has big ambitions to become a much bigger operation, despite its almost exponential growth under Altman’s leadership.

At the same time, it could mean working, for the first time, with investors who are not “accredited,” meaning high-net-worth investors — an idea that appeals to Altman.

To date, Y Combinator has been associated with some of the most elite and successful startups of the world, as well as the most elite and successful venture capitalists, with early investors in the program including names like Sequoia Capital, SV Angel and Yuri Milner of DST.

YC has meanwhile continued to ramp up its accelerator activities. In addition to its core YC program, the organization has started to focus on maturing startups through its later-stage Y Continuity Fund; it also runs an online, 10-week long Startup School that touches 3,000 startups at once, Altman said yesterday.

Still, Altman has plain ambitions to back many more startups, and he wants to broaden access to them. Asked onstage if he planned to double the size of YC, which Altman had said last year it was his ambition to do, he smiled. “We’ve gotten significantly more ambitious in the last year . . . I think we can figure out a way to make a whole lot more startups happen and really help them.”

Added Altman of the appeal of ICOs in particular, “People are watching their friends get really rich and it’s making them [frustrated and wanting to get rich, too].”

“One of the trends that bothers me about Silicon Valley,” he continued, is that “more and more of the wealth creation here is not available to most people, and I think that’s very bad in a society with already so much wealth inequality. If there’s a way that new technology can make it practical and possible to democratize this, I think that’d be great.”