Crypto-Currencies and ICOs: Are They Scams? An Empirical Study

23 Pages Posted: 8 Feb 2019 Last revised: 4 Apr 2019

See all articles by Daniel Liebau

Daniel Liebau

Erasmus University Rotterdam (EUR), Rotterdam School of Management (RSM); Singapore Management University

Patrick Schueffel

Haute école de gestion (HEG) de Fribourg

Date Written: January 23, 2019

Abstract

The volume of Initial Coin Offerings has risen steeply with an all-time high market capitalisation of close to USD 1 trillion in December 2017. Since then the digital asset market has slumped, retreating to merely approximately USD 200 billion in mid-2018. Stakeholders of the crypto industry have pondered the reasons for this retrenchment and are increasingly focusing on the notion that many ICOs could be scams. A recent industry study even went as far to claim that 80% of all ICOs are indeed scams. In this paper, we investigate the question whether scams are as common in the crypto field. We do so by, first, defining what a scam is and, secondly, by drawing on empirical data to assess the number of cases fitting such a definition. Building on Principal Agent Theory and based on the statistical analysis of our empirical data set we attempt to establish the current state of affairs with regards to scams in the crypto-currency world. The results of our study divert from salient beliefs.

Keywords: Blockchain, Scam, ICO, Digital Assets, Ethics, Crypto-Currency

JEL Classification: D01, D21, D26, D53, D84, K24

Suggested Citation

Liebau, Daniel and Schueffel, Patrick, Crypto-Currencies and ICOs: Are They Scams? An Empirical Study (January 23, 2019). Available at SSRN: https://ssrn.com/abstract=3320884 or http://dx.doi.org/10.2139/ssrn.3320884

Daniel Liebau (Contact Author)

Erasmus University Rotterdam (EUR), Rotterdam School of Management (RSM) ( email )

P.O. Box 1738
Room T08-21
3000 DR Rotterdam, 3000 DR
Netherlands

Singapore Management University

Li Ka Shing Library
70 Stamford Road
Singapore 178901, 178899
Singapore

Patrick Schueffel

Haute école de gestion (HEG) de Fribourg ( email )

Chemin du Musée 4
Fribourg, 1700
Switzerland

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