Open AccessEvaluate Legal, Operational and Governance Framework Design from Whitepapers for Initial Coins Offer (ICO)
Author(s) -
Wong Wai Wai,
Muhammed Siraj
Publication year - 2019
Publication title -
international journal of engineering and advanced technology
Language(s) - English
Resource type - Journals
ISSN - 2249-8958
DOI - 10.35940/ijeat.f1098.0986s319
Subject(s) - prospectus , business , security token , corporate governance , cryptocurrency , initial public offering , finance , investment (military) , property rights , economics , computer security , computer science , law , political science , politics , microeconomics
In this 20th Century Digital World, the Initial Coins Offer (ICO) acts as fundraisers for a start-up that is related to technology. There have been many successful ICOs launches over the past several years that have resulted in giving investors good returns for their investments. However, the lack of regulatory framework has resulted in the unregulated position and the unidentified nature of the dealings involved. There is a substantial number of ICOs which were scams and have resulted in multi-million-dollar fraud schemes. Potential Investors of ICOs are presently susceptible to misrepresentations, scam, and exploitation. Unlike the traditional mode of fundraising such as Initial Public Offer (IPO) where investors can access information through the vetted official prospectus of the proposed company which includes past financial performance and projected future operations together with all related financial statements. However, ICO potential investors for proposed ICO projects are only able to access and scrutinize published ICO whitepapers. ICO whitepapers are the only available documents or the source information that investors can access and rely on to make an informed judgment and investment decision. This research paper will highlight the important areas that should be rigorously studied and verified by potential investors when making an investment decision and to identify and distinguish the indicators of scam or fraudulent ICO project. Potential investors should familiarise themselves with the various types of ICO token and property rights attached accordingly as each token possesses a unique bundle of property rights. The property rights of ICO token together with the ERC-20 token standard which consists of six mandatory rules would serve as a useful guide for the potential investor to understand and to evaluate the legal, operational and governance of the framework of ICO projects in order to make an informed and appropriate investment decision.