Altcoin News: Bringing IEO to Binance Costs Startups 2–5% of the Amount Raised

June 11, 2019, by Marko Vidrih on ALTCOIN MAGAZINE

About $518 million was raised using 63 initial Initial Exchange Offerings (IEO) from January to May of this year, said John Todaro, director of digital currency research at TradeBlock, in a conversation with The Wall Street Journal.

“This is something like ICO 2.0,” said Michael Conn, managing partner of Quail Creek Ventures, an investor in digital assets of Quail Creek Ventures. — Fraudsters are not asleep. Many got burned on ICO. I think the same will happen with IEO.”

One of the most successful platforms in the context of IEO — Binance, takes for its services 2–5% of the attracted amount, said a representative of the project, whose tokens were placed through the Binance Launchpad. In addition, the platform earns commissions after the launch of trading.

EToro analyst Mati Greenspan considers IEO to be an improved variation of ICO due to the reputational risks incurred by exchanges.

“People assume that the exchanges do not want their names to be associated with a scam, so they are more likely to do the necessary work before associating themselves with any project,” he said.

Binance CEO, Changpeng Zhao told the WSJ that his company has a whole team of employees whose work is entirely related to the selection of projects for IEO. Zhao explained that the legal responsibility, for the most part, falls on issuers of tokens, but the exchange helps them limit the offer in those jurisdictions where it should not be done. Binance also requires projects to provide advice to lawyers confirming that their tokens are not securities.

Co-founder of the Harmony project, which IEO recently hosted on the Binance Launchpad platform, Nick White reported that they had been negotiating with representatives of the exchange for a whole month, answering “a bunch of questions”, including their team and business model.

In May, BitMEX published its own study, which questioned the long-term prospects of IEO, while recognizing their advantages over ICO.

Author: Marko Vidrih