Pretending not to do evil
Over the summer we witnessed a rush of obvious cash grabs, interspersed with the odd good idea and solid business.
As ICO fatigue has set in there has been an uptick in new projects professing to do things in the 'right way' by acting 'responsibly' in efforts to 'protect' the ecosystem'. They often feign ignorance as to why the other 'greedy' projects need these huge sums of money, before proceeding to ask for just $20m or so, which obviously every new start up that's barely begun operating needs.
This sort of faux ethical behaviour reached a zenith with Cindicator, a company with an already functioning iOS/Android app which is essentially a trivia app that aims to pool together the collective intelligence of users in order to produce trading tools and investment strategies.
Their token sale FAQ claimed to wish to avoid some of the issues other ICO's have seen (all of which I agree with). The whitelisting programme required you to fill out a fairly detailed form explaining how you wanted to use the products and the process was well run. The $15m was raised in short order, the tokens were locked up for 6 weeks, and all seemed to be moving according to plan.
For reasons I am still not quite clear on, minutes before the tokens were due to be available for transfer (and thus trading), the Cindicator team announced that they would be seeking to avoid listing on any exchange. Bizarrely, they sought even to 'delist' off the decentralised exchange Etherdelta. Because it is impossible to stop your tokens trading on a decentralised exchange owing to the ability to just trade against the contract address, all the team really achieved was to open people who sought to buy their token to scams and frauds. They claimed this was according to legal advice they had undertaken, which just begs the questions: a) Why wasn't this communicated during the token sale and not left to literally minutes before trading was due to start?; b) why in their whitepaper did they write:
Their rationale for not wanting to list on exchanges was because those exchanges couldn't guarantee the Cindicator team that tokens wouldn't be sold to US or Chinese citizens on said exchanges, a standard no other team in the space has sought to achieve. The team then explained their position (after much delay) in typically arrogant fashion, such as "CND Listing: Quality Does Not Tolerate Haste". They are the first team I have seen to be downvoted repeatedly in their own subreddit, with team responses being both rude and dismissive. Their telegram channel banned anyone with the temerity to ask about exchanges, despite it being a valid line of questioning from a community that, lest we forget, gave the team fifteen million dollars.
This is perhaps the most galling aspect. If the team had been clear in its position, that it would seek to delist on exchanges that did not meet their (ridiculous) standards and locked up tokens to prevent trading until the platform was complete (much like Polkadot have locked up all tokens for two years) then there could be no complaints. Instead the team deliberately played up to community wishes by including a promise to list on exchanges as part of their whitepaper and having only a brief lockup period of their tokens so they could take $15m of capital in order to avoid having to actually build a company.
The hard truth is that, despite all their protestations of doing the right thing, the Cindicator team have seen an easy route to a huge sum of capital that a start up of their size and potential could never hope to attain through traditional routes. The tokens have no value beyond access to the Cindicator products. To be clear, the team could have just sold the tokens to investors who wished to purchase their product on a case by case basis. However that would be hard work and take a number of years to achieve, so instead the team created an unnecessary token so they could raise a large sum of money, the same as numerous other teams in the space.
There is a need for greater self regulation in the crypto community, but it needs to be balanced towards the investor - not purely to preserve the interests of a team who seek merely to dress up their decisions as for the protection of the community.