Risk Statement

General Risks of Coin Offerings (ICO/ITO’s)

These may or may not be applicable to future TOE token sales.

What are ICOs?

The term ICO refers to a digital way of raising funds from the public using a virtual currency, also known as cryptocurrency. An ICO can also be known as ‘token sale’ or ‘coin sale’. The term ITO is commonly used for utility token sales.

ICOs vary widely in design. The digital token issued may represent a share in a firm, or a prepayment voucher for future services. ICOs are seen as high-risk, speculative investments by most regulators.


The dutch AFM is issuing a warning regarding some risks associated with Initial Coin Offerings (ICOs). While the AFM recognises the potential of blockchain technology for financial services, ICOs can be vulnerable to misrepresentation, fraud and manipulation, and also be structured in a way that they are not subject to supervision by the AFM. In addition, due to their unregulated status and the anonymous nature of the transactions involved, ICOs can be attractive for laundering of money obtained by criminal means.

What are the risks?

  • Unregulated space: ICOs are often not regulated by authorities and many are foreign based.

  • No investor protection: As an investor it is not likely to have access to regulatory protections like the Kifid or the Dutch Ombudsman.

  • Price volatility: Like cryptocurrencies in general, the value of any token may be extremely volatile and vulnerable to dramatic changes.

  • Potential for fraud: Some issuers might not have the intention to use the funds raised in the way set out when the project was marketed.

  • Inadequate documentation: Instead of a regulated prospectus, ICOs can provide only a ‘whitepaper’. An ICO whitepaper might be unbalanced, or incomplete. A sophisticated technical understanding is needed to fully understand the tokens’ characteristics and risks.

Early stage projects: Typically ICO projects are in an early stage of development and their business models are experimental. There is a chance of losing all or a large percentage of your participation.