iLocal News Archives

Chinese ICOs in Cayman Islands seeks overseas fundraising, new chance or new scam?

From 8BTC

More and more Chinese ICO projects are seeking fundraising overseas as prohibitive regulations over bitcoin and ICOs tightens. To bypass strict surveillance, these ICO projects have rejected direct private funding from Chinese individual investors, and turned to offshore foundations for fundraising, as reported by 21st Century Business Herald, a Chinese business news outlet.

“Offshore funds from Chinese investors are targeted, especially those who have tasted the sweetness in previous lucrative ICO investment. These Chinese investors are glad to be the bottom fisher taking advantage of the current sluggish market and buying in quotas of high-quality ICO projects at low prices”, according to an insider close to the business.

But they have to keep their identity hidden for the country’s escalated clampdown on ICOs. These sophisticated businessmen continue their ICOs investing with the help of offshore foundations in Cayman Islands or Seychelles, as the operating mode of offshore foundations registered there could precisely meet their privacy requirement.

“Some Chinese billionaires even straightforwardly set up offshore private company in the Cayman Islands, pouring funding into it, and have it managed by seasoned ICO investment professionals, with the aim of being the next Alibaba / Tencent (blockchain giant).”

“Every week has been seeing Chinese blockchain projects do ICO (Initial Coin Offering) roadshow here in Silicon Valley since this year,” a Silicon Valley-based venture capitalist said, “they are mainly aiming at Chinese investors’ offshore funds which are out of government reach. A plurality of Chinese VC have also participated in this ICO game.”

He noticed some positive changes in the recent blockchain projects compared with previous ICO projects a plurality of which are scams. First of all, most have a high-quality technology developing team, led by former technical backbones of world-known tech institutions; On the other hand, their corresponding underlying blockchain technology and application scenarios are more reliable and practical.

To bypass the regulations, these ICOs have rejected direct private funding from Chinese individual investors, and turned to offshore foundations. This gives rise to the emerging of a new investment mode related to ICO funding. Some investment professionals specialized in ICO investment seize the chance to figure out a new approach for enthusiastic funds coming into this area. They make full use of the advantages of Cayman Islands and Seychelles, setting up offshore investment foundations there and then raising fund from global crypto investors to make investment in ICO projects with potential. Most foundations have raised fund ranging from $ 40 million to 50 million, with an average of $ 1 million invested in a single ICO project.

“Some foundations are initiated by professionals who are well acquainted with blockchain technology and source code. Superriches therefore are attracted,” this Silicon Valley-based venture capitalist disclosed.

With the wider application of blockchain, a growing number of wealthy people believe that a new Google, Facebook or Alibaba will spawn in the blockchain space, and they would like to invest only part of their asset but maybe with huge returns.

But to his surprise, the notorious proxy mode unexpectedly comes back accompanying the offshore fundraising approach.

Claiming they have the capability to get quotas of high-quality ICO projects, proxies crowdfund fiat or tokens from individual investors for ICO investment, and promise guaranteed returns with 1% daily interest. This risky mode went viral shortly in the crypto market. Individual investors never knew the trading price and when the proxy would cashed out, not to mention actual gains and losses, neither would they know that proxies charged commission fees from them and asked for secret compensation from ICO projects if it failed. According to a report of 8BTC last month, an ICO proxy allegedly scammed 140,000 ETH in China with RFR involved.

More Chinese ICO projects are reaching their hands to overseas market, will it be a new chance, or new trap for global crypto investors?

For more on this story go to:




Your email address will not be published. Required fields are marked *