The Filecoin ICO proves that even the SEC can’t slow down today’s crypto market.
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Filecoin’s initial coin offering (ICO) may set records in terms of scale by the time it ends. To date, the pre-sale of tokens for the decentralized storage network sits comfortably close to the $200 million mark, most of which flew off the digital shelf in the first hour or so of the offering.
Indeed, Filecoin’s staggering and rapid success has garnered both mainstream coverage:
- WSJ: “Latest Hot Digital Coin Offering: $187 Million in One Hour for Filecoin”
- TNW: “Cryptocurrency service forced to halt ICO after raising $186M in one hour.” And here we are, slackjawed on a Monday morning at how much money is flying around the ICO market.
Notably, Filecoin’s success comes after the SEC’s warning that fundraising through ICOs still lands at least partially under its aegis, potentially limiting some investment from US-based individuals. On the other end of the hype-balance, the ICO is taking place during bitcoin’s latest spikes. When cryptos like bitcoin and ethereum do well, it seems, ICOs do even better.
But what snagged our attention is that this ICO is more than a wild public pre-sale of tokens that will eventually have value. Instead, there’s some institutional money at play.
Traditional Dollars, Non-Traditional Vehicles
Crunchbase’s page concerning the Filecoin ICO notes a $52 million fundraising event for the product earlier this month. Participants in the round include Union Square Ventures, Andreessen Horowitz, and Sequoia. For the uninitiated, those are blue-chip venture firms that have pedigrees in backing tech’s biggest successes. USV backed Twitter, Andreessen back Airbnb, and Sequoia backed LinkedIn (and everything else).
As it turns out, the big investors got in during “a token pre-sale ahead of [the] initial coin offering launch.” Returning to the afore-linked WSJ piece, the following quote is illustrative:
The way the public sale was orchestrated, the earliest investors would get the lowest price. This appears to have contributed to the rush in the first hour, as investors tried to get in and get the lower prices.
As Filecoin’s token is set up to cost more, later on, I think it’s fair to presume that these traditional investors got in at a discount to what the public did—or at least part of the public.
As the price of Filecoin has already appreciated greatly since that time, we can presume that the big kids are already pretty far up. Akin to the IPO market, the ICO market can provide the already-wealthy with a bit more to stack up.
Despite the pre-pre-sale, the ICO itself went like mad. Here’s the chart, via Filecoin itself:
And that, friends, is why startups that are product- and revenue-free are turning to the crypto market. Why bother with raising money from venture capitalists when there is, apparently, hundreds of millions of dollars to be raised in minutes?
The joke here is that Filecoin did both. But if the venture players did get in at a discount, they have already hedged their risk, courtesy of public enthusiasm.
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What does Filecoin do? It’s a way to store files on unused storage space around the Internet. The more storage space you have, it seems, the more Filecoin you mine. But, you don’t really care, do you?
Take us home, WSJ:
Token prices, which initially began at $1.30, would start on Saturday at $4.68, rising along a defined price function, and offering investors various vesting periods, with higher discounts for longer vesting periods. The tokens being bought in this sale won’t be delivered until the Filecoin Network launches. Currently, there is no launch date set.
Of course.
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