Money Manager Josh Brown: 'ICOs Are Where The Frauds Will Take Place'

Josh Brown, the money manager and bitcoin bear-turned-bull, had some harsh words for initial coin offerings (ICOs) in a new blog post.

AccessTimeIconSep 22, 2017 at 9:31 p.m. UTC
Updated Sep 13, 2021 at 6:57 a.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

Josh Brown, the money manager and bitcoin bear-turned-bull, had some harsh words for initial coin offerings (ICOs) in a new blog post: in his words, the funding model is "where the frauds will take place."

Writing on his Reformed Broker blog, Brown – who earlier this month told CoinDesk that he thinks ICOs will "blow up in everyone's face" – reiterated his position, citing the incredulity shared by West Loop Partners general partner Jeff Carter in a new blog post of his own.

He wrote:

"Jeff's a friend of mine but he comes at these things from a Chicago floor trader – turned angel investor's mentality. I come at these things from a reformed stock broker's perspective. We don't always see eye to eye but, in this case, we've arrived at exactly the same place. ICOs are where the frauds will take place."

He blasted ICO-derived tokens as serving as little more than unregistered securities, stating that, unlike some cryptocurrencies, those pieces of data can only be used in conjunction with a particular app or platform.

"Unlike traditional securities sales, there is no regulation here. I can say that I'm starting a walrus sex ranch and that the digital token I am using to raise the capital will be good for two hours of sex with one of my walruses," he wrote. "You buy five of my tokens, because you've always wanted to make love to a walrus, and this gives you the right to ten hours of unadulterated bliss with my product once I've raised enough from maniacs like you to go into operation."

His comments come as securities regulators around the world more closely scrutinize the ICO model or develop new rules around them. Despite warnings from some governments that token sales may constitute securities offerings, institutional investors have moved in recent months to capitalize on the interest around them by backing dedicated hedge funds or taking part in ICOs directly.

Brown concluded by saying that, from his perspective, overall enthusiasm for the tech or cryptocurrencies in particular shouldn't preclude a degree of skepticism about ICOs, which to date have generated more than $2 billion in investments, according to data from CoinDesk's ICO Tracker.

"It's okay to be bullish or even bull-curious about blockchain and bitcoin without being a credulous, fanatical moron about ICOs. This is where I stand," he wrote.

Image via Shutterstock

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.