Confession of an ICO Investment Banker: Feel Guilty and Will Quit Soon
It was reported that an ICO project needs to pay 10-30 per cent of the raised fund to investment banking teams for their services on fundraising advice and solutions. The charge for an ICO project is mainly determined by the operating difficulty in refining the business plan and market cap management, according to the 21st Century Business Herald, a Chinese business news outlet.
A plurality of tokens’ prices surged hundreds of folds in the ICO craze. The alluring profits quicken the pace of investment bankers swarming into this space. Sun Cheng (pseudonym), a member of them, told that the services an investment banker provide for ICO projects are all-around including writing business proposal, undertaking fundraising roadshow, managing market cap, as well as maintaining investor relations.
“Many investment bankers have recently set up their own private companies in Hong Kong in a bid to provide services for domestic ICO projects seeking overseas fundraising.”
“A consensus has been reached among investment bankers that investment banking services for ICOs is far more lucrative than that for IPOs.”
The apparent reason behind it is that IPO shall go under strict supervision and censorship of the Securities Exchange Commission and stock exchanges, while the regulations for ICO are absent for the time being. Some ICO projects lacking in practical application scenarios could be processed with “glamorous package”, and then go for fundraising. And the charge for this service is far more than that of IPO.
That said, many ICO projects in the country are very glad to pay for this, as they believe that the market cap management provided by those investment bankers could bring them high returns.
More specifically, a number of investment banking teams could forge fake trading quotes and hype up the token prices with the help of cryptocurrency trading platforms who would like to offer the paid service. Apart from that, they are also adept at merging other small blockchain projects in a bid to raise the demand and price of their client’s token.
Some ICO investment bankers even teamed up with foundations suspected of pyramid schemes, alluring uninformed individual investors to invest in the project. When the token price is manipulated to a certain point, they will tell their client it’s time to draw the net in.
“These investment bankers accept mainstream cryptocurrencies like BTC and ETH as service fees. If the price of these digital gold surges, they would gain more by cashing out in time.” Sun confided. He has heard that many investment bankers who focused their ambition on ICOs after securities trading had earned tens of millions yuan simply in six months, behind which, there are many inside stories and dirty jobs.
Sun smells quick cash as well as dangers in this sector. He’s afraid one day investors may come for him if the token issuer disappears with their money, and he has made the decision that he’ll get out of this game after finishing the two cases in hand.