Yesterday, findings released by Big Four accountancy firm EY revealed the woeful performance of most of the crypto projects which made initial coin offerings in the last 12 months. The ICO report deals exclusively with what it calls “The Class of 2017”, the first wave of cryptocurrencies launched into the market shortly before the pricing boom of December last year. However, given the accountancy giant’s own less than stellar reputation, one can be forgiven for taking its dour forecast with a decent pinch of salt.
The study revisits the projects which made up 87% of the total ICO funding for 2017 (which equates to 141 separate cryptocurrencies) and measures their progress over a 12 month period. Whilst it’s common knowledge that the market has contracted in 2018, EY’s findings still make for a pretty grim read.
Of the 141 projects considered, 86% have tokens whose trading values are below their original listing price. Of this group, 30% are bereft of any practical monetary worth and have, according to EY, lost “substantially all value.” There will be few holders of cryptocurrency who have failed to notice the decline in the value of their portfolio since the beginning of the year, but in case further confirmation were needed EY’s ICO report states that;
“an investor purchasing a portfolio of The Class of 2017 ICOs on 1 January 2018 would most likely have lost 66% of their investment.”
Looking more closely at the products themselves, the study found that only 29% of the projects which received ICO funding in the studied period now have a functional platform or prototype, a mere 14% improvement from December 2017. Even more worryingly, 71% have, “no offering in the market at all.”
So, the ICO market appears bleak but perhaps as well as highlighting the problem, EY may also hold the solution.
In the years leading up to the economic crash of 2008, another struggling financial enterprise, Lehman Brothers, was staring into the abyss and sought out the services of a large accountancy firm to help deceive its investors about the condition of the company. The firm they hired to undertake what has since been labelled a, “massive accounting fraud” was one Ernst and Young, latterly EY. Since then, EY has paid more than 100 million US dollars in damages and is still, somewhat remarkably, well respected in its field. So, if any of the failing ICOs listed in the report are reading this, I have a suggestion;
If you have a problem that only fraudulent accounting can solve, if no one else can help, and if you can find them….maybe you can hire… The EY-Team.