ESMA highlights ICO risks for investors

An ICO is an innovative way of raising money from the public, using so-called coins or tokens and can also be called an initial token offering or token sale.

The European Securities and Markets Authority (ESMA) is alerting investors to the high risks of so-called ICOs. If you are considering investing in ICOs or have already done so, be aware of the many risks this may entail, including the total loss of your investment. In particular, be aware that you will have no protection in the case where the ICO is unregulated.

According to the statement the main risks of investing in ICOs are:

  • Unregulated space, vulnerable to fraud or illicit activities (several recent ICOs having been identified as frauds)
  • High risk of losing all of the invested capital
  • Lack of exit options and extreme price volatility (Investors may not be able to trade their coins or tokens or to exchange them for traditional currencies)
  • Inadequate information (the information that is made available to investors, is in most cases unaudited, incomplete, unbalanced or even misleading)
  • Flaws in the technology (there may be flaws in the code or programs that are used to create, transfer or store the coins or tokens)

Please find attached a link for the full statement ESMA highlights ICO risks for investors

 

 

Posted in ICO