This is a spin on Initial Public Offering (IPO) in the equity markets.
An ICO is the selling of a token in exchange for fiat currency, Bitcoin, or other altcoins.
These were big in 2017, with billions of dollars raised. The Securities and Exchange Commission in the United States took an aggressive approach to those who raised money in this manner.
The view of that agency is these entities were selling unregistered securities, a violation of the Securities laws.
Project basically opened up a website along with cryptocurrency wallets and began to accept payments. This was a way to raise money although it did attract fraud. During the bull market of 2017, many people got FOMO and jumped on many different projects.
The challenge was some sounded legitimate. Even the ones that were faced a monumental task of fulfilling what was in their white papers. It is not surprising most of these tokens ended up worthless.
Ethereum was the main blockchain for this with the smart contract capability on the platform. Hence ETH became one of the currencies most widely used during the ICO craze.
Many projects were impacted even more to the downside as founders gave themselves a large pre-mine. This resulted in many of them dumping the coins and tokens on the market, helping to crash the price. It was another way that investors were defrauded.
