A new report from “Big Four” accounting firm Ernst & Young (EY) shows that only 13% of initial coin offerings (ICOs) have launched a functioning project. In addition, EY confirmed what many cryptocurrency investors know – many ICOs are trading below their initial offering price.

Reuters reports that this new study from EY surveyed more than 141 initial coin offerings (ICOs) that launched in 2017. Of the ICOs surveyed, 86% of them have fallen below the initial offering price.

This new report is a follow-up to another survey on ICOs created by EY in December of 2017. Said report, published during the peak of the ICO mania, shows how much money was invested in these projects.

It also shows that even then, only 5% of the ICOs analyzed had a functioning product. The graphic below from the new article shows that the majority of ICOs still do not have a working product:

From EY's report

“This looks worse than we thought,” said Paul Brody, global innovation leader for blockchain technology at EY. Brody is critical of ICOs, claiming these are “much, much worse” than the companies launched in the dot-com bubble. He said:

At least from Pets.com you could get pets food. They had an actual working business, they had a product.

EY explains that one of the problems with these ICOs is that they were utility tokens. In theory, these tokens were to be used to pay for websites, tools, or networks that the ICO companies were building.

However once the projects were launched, many of the ICO companies ditched their tokens and instead began accepting fiat currency or other cryptocurrencies. Notably, some of them have stopped accepting their own token, worried that it won’t hold value.

From EY's report

ICOs were all the rage in 2017. It’s estimated that in that year alone, more than $5 billion were raised by ICO projects, and the momentum hasn’t stopped. As reported by CryptoGlobe in June, almost $14 billion were raised by ICOs in 2018. Despite Ernst & Young’s grim findings, it seems the ICO train is still rolling.