Ever since ‘blockchain’ and ‘funding’ found parallel mentions, ICO was considered to be de facto standard for raising funds for crypto project and startups.
The process for an ICO is quite simple. A company can offer investors a new innovative cryptocurrency or a representative token that the investors can buy using Bitcoin or Ethereum or fiat currency. This money will be used to finance the development of a new project or application. Future investors receive tokens and a promise that the investment that they have made will benefit them in the form of access to the platform, product or services.
In ICO, the legal protection of potential investors is considerably poor. The entire process is based on trust. There is every chance that the trust can be misused and any team can scam the investors. While the rapid advancement of Technology can be considered a boon, making the existing legal system catch up with the technological advancements is another task. This is one of the major reasons why blockchain failed, especially when it comes to ICOs.