Binance Launchpad makes IEO hot, but who will invest in it in the end? | opera777 slot, asustoto slot

Cryptocurrency exchanges themselves have been criticized and questioned by the outside world. Before, they were only engaged in the secondary market and did not participate in the primary market. Now that you want to participate in the primary market, the responsibilities and risks of the exchange itself will be even more magnified.

Following Binance’s relaunch of Launchpad’s direct crowdfunding platform, Huobi announced the launch of Huobi Prime on March 7, and OKEx also announced on March 12 that it would launch an IEO platform—“OK Jumpstart” in the near future. The American cryptocurrency exchange Bittrex also soon announced that its subsidiary Bittrex International will launch an IEO platform, and the blockchain game data project RAID will become the first project of the platform. Exchanges such as Binance, Huobi, OK, and Bittrex have successively launched IEO platforms, allowing more small and medium-sized exchanges to see new hope in the bear market. In the future, more small and medium-sized exchanges will rush to follow suit.

But not long after that, Bittrex issued a statement on Twitter on March 15 that it would cancel the issuance of the first IEO token (RAID). The Bittrex International RAID IEO social media team stated that the cancellation of the IEO was mainly due to significant changes in RAID's business status. Some media analysis said that the RAID project was stopped by Bittrex at the last moment of the project's launch because it involved major false propaganda and fraud (there were only seven hours left before the project's scheduled launch time).

Some people in the industry said that this incident certainly reflects Bittrex’s courage and care for the credibility of the platform. But it can also be seen from the time of discovery that if the project party deliberately conceals it, it will be difficult for the exchange to discover it. At the same time, it is also worth thinking about whether the IEO model has the value to change the industry.

Cold thinking under the heat

With the popularity of Launchpad and the recent launch of public chains and decentralized exchanges, Binance Coin (BNB) has become the seventh cryptocurrency in terms of market capitalization. As of March 15, the total market value of BNB exceeded US$2 billion, and the price of a single currency exceeded US$15. It has increased by 72.56% in the past month.

Platform coins can essentially be understood as stocks issued by exchanges on their own platforms. Ideally, its value comes from the market's confidence in the exchange. However, the issuer and largest holder of the platform currency are both controllers of the exchange, so the price of the platform currency is seriously affected by trading. In the absence of any financial regulatory mechanism, exchange controllers can cooperate with the market momentum to easily raise their own platform coins to higher prices and increase their own corporate valuations.

The essence of this round of direct exchange listing activities (IEO) is that IEO uses platform currency for financing, which greatly enriches the application scenarios of platform currency. At the same time, the prerequisite for raising funds in the public market requires users to purchase platform currency in advance, thereby increasing the price of the platform currency.

Binance’s big move has also begun to trigger a chain reaction. On March 7, Huobi Global CEO Weng Xiaoqi also said that he would launch the Huobi Prime preferred currency listing channel. According to an article published by Planet Daily, its essence is the same as Binance’s Launchpad. On March 12, OKEx CEO Jay Hao stated on Weibo that the OKEX utility token sales platform "OK Jumpstart" will also be launched.

Compared with the secretiveness of Binance and Huobi, OKEx is more direct. JayHao directly admitted that "OK Jumpstart" is the IEO platform.

After the three major cryptocurrency exchanges announced their IEO plans, various platform coins surged. Huobi’s platform currency HT has risen from US$1.73 on March 7 to US$1.99 today (March 15), an increase of more than 15%. OKB is not far behind. Based on the opening price of $0.92 announced on the 12th, the price as of March 15 was $1.03, an increase of 11.9%.

“The restart of Launchpad has not essentially changed the value and significance of the platform currency. It has created more solid application scenarios for the platform currency and improved users’ consensus on the platform ecology. "Senior blockchain analyst Long Yi analyzed that.

According to Caijing.com, Binance Launchpad was launched as early as 2017, and has since launched two projects, Gifto and Bread Wallet. But in the following more than a year, Launchpad did not launch new projects. Until the emergence of BTT and Fet.

Regarding this gap that lasted for more than a year, Binance COO He Yi gave an explanation that the reason for suspending launchpad was because the market in 2017 was too hot and even a little crazy. Binance believes that the market needs to calm down at that time. The reason for restarting this platform now is that some excellent projects were born under the bear market.

ForLi Qin, the founder of the project, does not agree with He Yi's view.

He said that the outside world still has many doubts about the prospects of the BTT and FET projects. As for Binance’s Launchpad, it is considered a successful marketing.

"Being popular is due to the right time, right place, and right people. At the right time, there are not many hot spots in the context of a bear market. In the right place, Binance has made frequent moves recently, launching its public chain and decentralized exchange DEX. In the context of a bear market, attention is focused on it. People and people depend on the media's fueling." Li Qin added

Regarding whether Launchpad’s popularity can be replicated and the significance of the IEO model to the cryptocurrency field, Xiong Hao, leader of the Digital Currency Research Group of the University of Hong Kong, told Caijing.com that it has speculative value for investors, but is meaningless for industry development.

Cryptocurrency exchanges themselves have been criticized and questioned by the outside world. Before, they were only engaged in the secondary market and did not participate in the primary market. Now that you want to participate in the primary market, the responsibilities and risks of the exchange itself will be even more magnified.

"This has to make people suspect that the exchange's profits in other fields are no longer enough to support its current size, and then it is left to speculate. The IEO model has neither technical content nor innovation. It is difficult to say that it is valuable."

In fact, the financing method in the cryptocurrency field has always been to seek endorsements to increase its credit. When ICOs became popular, they sought celebrities to endorse their platforms. Later, the STO model tried to bring in state machinery. And this IEO simply brought the exchange in to increase its credit.

"For the project, the most important thing is whether it is valuable, not who will endorse it. The understanding of blockchain is to advocate decentralization and distribution. But now everyone is attracting centralized institutions to endorse it, which is a very strange phenomenon." Xiong Hao finally sighed.

Similar to Xiong Hao’s views is ArcBlock founder and CEO Mao Zhihong. He also believes that IEO will be shorter than STO. It is a completely centralized thinking and is controlled by exchanges. It is not as good as STO that is closer to the government.

Ambiguing rights and responsibilities

In fact, the industry is still divided on the value of IEO. Optimists believe that IEO is different from ICO. Financing through the IEO model requires a series of reviews by the exchange before financing can be carried out. Although exchanges cannot fully identify the prospects of the project, each exchange will carefully review the project before conducting an IEO to reduce certain risks for its own users.

Hong Shuning, former director of Jinqiu Blockchain Research Institute, also questioned this view. "Compared with traditional ICO, IEO has an additional exchange screening process, which has a certain effect on improving the credibility of the project, but the effect is limited because the exchange does not have enough ability and motivation to screen out valuable projects."

Excessive reliance on the exchange itself without any restraint mechanism to restrain itself makes it difficult to avoid subjective evil actions by the exchange. At the same time, because the overall mechanism of IEO is not perfect, the rights and responsibilities of exchanges and project parties are not clear.

Unclear rights and responsibilities prevent investors and supervisors from being held accountable, and ultimately no one will be responsible for the project.

“Most exchanges also have special currency listing rules and project review teams, but the reality is that problematic projects also have many problems.There are many, so for the same reason, no one can guarantee that IEO projects are more reliable, unless the exchange is willing to protect the interests of investors by establishing a liability mechanism like a margin. But obviously, the exchange will not do this mechanism. "Xiong Hao said.

Regarding the positioning and rights and responsibilities of Launchpad, He Yi responded that Binance only provides an open platform for project parties. At the same time, the rise and fall of projects is a market behavior, and Binance does not endorse anyone.

As for the issue of rights and responsibilities, she said that since there are no rules in the entire cryptocurrency market, what Binance can do is self-discipline and use the team’s own standards to screen projects. For example: Is the business model established? Is technical precipitation enough? Is the project team stable and the price reasonable?

The above picture shows the standards for exchanges on projects disclosed by Binance. From it, you can see that the conditions are very broad. It is difficult to see from these conditions that this is a truly responsible standard.

Binance’s statement also reflects the objective current situation of the industry, which has no supervision and regulatory mechanism at all. Relying on the so-called self-restraint of cryptocurrency exchanges, as an investor, you can only hope that the exchange will not do evil. Perhaps in the future, as more exchanges launch IEOs, this kind of "passing the blame" attitude of using their own platforms to help project sites, and ultimately having nothing to do with the exchanges, will become the norm.

Under the ICO model, the project team still needs to conduct a road show and disclose more information to let investors understand. Investors will also use more means and methods to understand projects. But under the IEO model, it seems that both parties save a lot of trouble. They only need to let investors know that the project is endorsed by the exchange. The project side lacks motivation to promote the project, and investors will not learn more about the project based on trust.

Zheng Tong, the founder of an investment institution, also said that the IEO model violates normal investment logic.

“Investment institutions adhere to the attitude of “seeing is believing” when it comes to projects to be invested. When conducting project investigations, they may have to meet and communicate with the project founding team many times. At the same time, they must be well aware of the investment return cycle and rate of return. On the other hand, the IEO model is equivalent to leaving the due diligence work entirely to the exchange, lacking understanding of the project side. At the same time, the investment return cycle of such a project is completely uncontrollable, which completely violates the investment logic of investment institutions. ”

In fact, our close neighbor South Korea also started exploring the IEO model in 2018. According to statistics from the "Korea IEO Fund Raising and Coin Listing Report", many exchanges such as Cashierest, Bitsonic, Probit, BTCC Korea, Coinzest, Coinbene, Coinrail, Bitforex, IDCM, etc. have launched IEO platforms, and many projects including SPIN, VESTELLA, Clink, etc. have completed fundraising through IEO.

In November 2018, KBSA (Korea Blockchain Entrepreneurship Association), the Korea Blockchain Industry Promotion Association and Korea University Cryptocurrency Research Center jointly announced IEO guidelines. The guidelines include buyer protection, development planning, technologyDozens of projects were reviewed in five aspects: technical data, legal compliance, and safety, and a scoring mechanism was finally formed, with different sales quotas awarded for different scores. KBSA Vice President Ted Koo said in an interview that the IEO Guideline will continue to be upgraded and improved based on actual cases.

“South Korea’s Blockchain Industry Association plays a big role in this. Investigating and supervising exchanges and project parties can minimize the possibility of them joining forces to do evil.” Senior observer Feng Qicheng commented.

"South Korea is currently only at the industry association level, and the government is also considering introducing laws and regulations related to IEO." Feng Qicheng added.

Compared with traditional financing models, blockchain projects are still in their original state in terms of information disclosure and fundraising plan arrangements. There should be a clear distinction between the rights and responsibilities of the exchange and the project party, and at the same time, there should also be a third party to supervise. If the brokerage business + recommendation business + approval business + exchange business are all played by one entity, problems will inevitably arise.

Regulatory issues highlighted

In China, on August 24, 2018, the China Banking and Insurance Regulatory Commission, the Central Cyberspace Administration of China, the Ministry of Public Security, the People's Bank of China, and the State Administration for Market Regulation issued the "Risk Warning on Preventing Illegal Fund-raising in the Name of "Virtual Currency" and "Blockchain", which clearly mentioned that some criminals are issuing tokens in the name of ICO, IFO, IEO, etc. There are major risks.

Zhang Feng, a lawyer at Beijing Jincheng Tongda (Shanghai) Law Firm, said that IEO is essentially an act of selling tokens and is not much different from ICO in terms of legal recognition.

"Not only in China, but also in the United States, there is a high probability that IEO will be recognized as ICO. Except for Bitcoin and Ethereum (now controversial), most other ICO projects will be defined as securities. If so, many projects will have problems." Zhang Feng added.

Although the legal definitions will not be essentially different, there are certain differences in terms of legal responsibilities.

Zhang Feng mentioned that in the current IEO model, from a legal perspective, both the project party and the exchange have responsibilities, but the project party still bears primary responsibility, and the exchange bears secondary responsibility.

“Essentially, tokens are issued in the name of the project party. The first responsible party is of course the project party, whether the project itself is actually being done and whether it is operating. The exchange must also conduct necessary supervision, review, investigation and verification of the platform project.”

In this regard, Xiao Sa, director of the Bank of China Law Research Association, also believes that the legal liability of exchanges under the IEO model is heavier than that under the ICO model.

“In the ICO model, the project party is the main responsible person. If a legal dispute occurs in the project, the project party will be responsible for the main legal liability. Depending on the situation, whether the exchange has to pay joint liability or secondary liability. Under the IEO model, the exchange is not only the trading subject but also the financing issuance subject. It is legally called a direct stakeholder. The legal liability of the exchange will be heavier than that under the ICO model.”

“There are many cases involving ICO or cryptocurrency in China, and most of these cases have resulted in criminal cases rather than civil lawsuits. The legal provisions involved in transactions are Article 225 of the Criminal LawIllegal business crime. Project parties are usually involved in Article 192 of the crime of fund-raising fraud, and another crime is Article 266 of the Criminal Law. If the exchange plays the role of the project party and carries out project financing and issuance, it may also be involved in these two crimes. In principle, in terms of the entire criminal law, if a person is suspected of two crimes, the judiciary will generally deal with it more severely. The maximum penalty is life imprisonment. "Xiao Sa warned.

Under the IEO model, the value and status of cryptocurrency exchanges have become increasingly prominent, followed by heavier legal and market responsibilities. Exchanges should not be too short-sighted and only value the short-term benefits brought by the IEO model and ignore the long-term development of the cryptocurrency industry.

Li Qin, Long Yi, Zheng Tong, and Feng Qicheng are all pseudonyms

Source: Financial Magazine