Community Responds to Questionable ICO Practices as EOS Raises $185 Million

EOS, an infrastructure developed on top of the Ethereum protocol to provide a flexible and scalable ecosystem for decentralized applications, recently raised a total of $185 million in its initial coin offering (ICO).

The successful ICO campaign of EOS surpassed the amount of capital raised by billionaire investor Tim Draper-endorsed Bancor Network in its ICO. EOS raised approximately $35 million more than Bancor to become the most successful and largest ICO to date.

However, the criticism against ICOs including EOS and Bancor has been the bubble-like ICO market and the emergence of traders looking to profit off projects, blockchain projects in particular, with no viable products, prototypes and codes.

For instance, CCN previously reported in an article entitled “Cornell Professor: $150 Million Bancor is Flawed” that Bancor raised around $150 million for 40 lines of code that were untested. Bitcoin and security expert Andreas Antonopoulos and Augur co-founder Joey Krug also expressed their concerns over the ICO of Bancor, considering the minimal work it has presented in order to secure millions of dollars in investment.

To avoid any controversy from the start, EOS introduced a document called Token Purchase Agreement to offer investment advice to potential buyers, traders and investors. The document emphasized that investors residing in the US can’t invest in EOS and that the native token of the EOS blockchain network has no purpose. These two points triggered controversy within the ICO and cryptocurrency communities.

To potential investors, EOS emphasized that EOS is not an investment and its tokens are not considered as cryptocurrencies. Such explanation questioned the necessity of the EOS token and the reason why the vast majority of investors purchased $185 million worth of EOS tokens.

In essence, the native tokens of cryptocurrency or blockchain networks are developed and distributed to serve specific purposes. The Ethereum network’s Ether is utilized as gas or transaction fee to fuel decentralized application. Bitcoin was developed to operate as a store of value and as a digital currency. However, EOS clearly stated that its token is not a commodity, investment, and a currency.

Prominent cryptocurrency traders including WhalePanda criticized the investors of EOS for misunderstanding the purpose of EOS and its offerings.