A bad ICO sales structure is why Tezos is currently a top discussion in the financial news. The events happening within Tezos’ investor’s framework is a lesson we can all benefit from. One thing concerning this dilemma is the rumors going around that a number of specific investors are able to withdraw the profit their initial investment has made. This has caused people to believe that some investors have been misled concerning investing in ICO from Tezos.
Tezos, a decentralized Blockchain that operates by itself, by establishing a true digital commonwealth sounds like the perfect opportunity for crypto-investors to poor their capital in, so why would investors have to think twice? The idea behind Tezos was to develop a self-amending crypto ledger to improve both Bitcoin and Ethereum networks with better security protocols.
Early Warning Signs
One can get a clear insight to the first red flag that went up when it came to investing in Tezos ICO by reading their whitepaper. Any whitepaper should always be written in both technical and non-technical terms, where Tezos were not.
One of the main investors in Tezos ICO was the billionaire Tim Draper. But what doesn’t make sense is that Tim’s main investment in the ICO happened in 2017 but pre deals were done already in 2016. This came to a big concern to a lot of people as Tim bought ICO back in 2016 when there wasn’t even ICO code ready to be released yet.
Back then Tezos was valued at $6 mil, where now Tezos is valued at $150 mil, so it’s clear that Tim has maybe more than doubled his original investment. Sceptics believe that a percentage of it even went to Arthur and Kathleen Breitman, owners of (Dynamic Ledger Solutions (DSL), who owns Tezos.
Without knowing this, investors rushed to follow Tim Draper’s example and invest in Tezos ICO. They originally thought they would be investing alongside Tim in the long run, not knowing that Tim will take profit within the near future.
This unethical strategy by Tezos drew quite the attention of SEC. If SEC decides to investigate the matter further which they will certainly do, there might be a chance that Tezos would be forced to refund all of the money that they have received from investors.
Many believe that Tezos ICO sales structure is based on greed and self-gain as 8.5% of all investments go directly to the DLS shareholders. This contradicts what ICO stands for. The capital an investor contributes towards a company’s ICO will earn a profit based on the performance of the company, but it’s clear that when it comes to Tezos what determines the profit an investor will receive is how much money the ICO has raised.
And since investors are left in the dark they have no idea how much has been raised or anything else, so why they keep investing money into Tezos, Tim and other shareholders including Arthur and Kathleen are profiting and selling out.
ICO is rapidly becoming the best crowd funding method there is but some companies take advantage of it. Matjaž Slak, a start-up coach even said in a media statement that, “very often in the ICO projects we see founders with little or no experience in running a large organization” and with such a large amount of capital flowing into the project it’s quite often that we see people’s judgment being clouded.
So to avoid being in such a predicament that Tezos have left their investors in one should always do an incredible amount of research first. It’s important to be cautious when investing in an ICO which has no set amount. The company needs to state how much is need for development or else they might take in more than needed and end up not being able to deliver on expectations.
Investors should always first study the company’s business plan and internal structure before investing because if there are any possible flaws it would be visible in the business plan. The main thing to remember that ICO tokens should be registered with the SEC, if not then look for another investment opportunity.