Initial coin offerings, information disclosure, and fraud

Lars Hornuf (), Theresa Kück () and Armin Schwienbacher
Additional contact information
Lars Hornuf: Max Planck Institute for Innovation and Competition
Theresa Kück: University of Bremen, Faculty of Business Studies and Economics

Small Business Economics, 2022, vol. 58, issue 4, No 1, 1759 pages

Abstract: Abstract We study the extent of fraud in initial coin offerings (ICOs), and whether information disclosure prior to the issuance predicts fraud. We document different types of fraud, and that fraudulent ICOs are on average much larger than the sample average. Issuers who disclose their code on GitHub are more likely to be targeted by phishing and hacker activities, which suggests that there are risks related to disclosing the code. Generally, we find it extremely difficult to predict fraud with the information available at the time of issuance. This calls for the need to install a third party that certifies the quality of the issuers, such as specialized platforms, or the engagement of institutional investors and venture capital funds that can perform a due diligence and thus verify the quality of the project.

Keywords: Initial coin offering; Fraud; Cryptocurrencies; G18; G38; L26; M13 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Working Paper: Initial Coin Offerings, Information Disclosure, and Fraud (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:kap:sbusec:v:58:y:2022:i:4:d:10.1007_s11187-021-00471-y

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DOI: 10.1007/s11187-021-00471-y

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