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New working paper: Initial Coin Offerings, Information Disclosure, and Fraud

The research work of Lars Hornuf and Theresa Kück in collaboration with Armin Schwienbacher (SKEMA Business School) on "Initial Coin Offerings, Information Disclosure, and Fraud" is now available as a working paper. In the paper, they conclude that in some cases in ICOs disclosure on the Github platform is not a good idea, and that Gary Becker was right that stealing only makes sense when considerable sums of money are involved.

The CESifo Working Paper No. 7962 can be found here.

The abstract of the working paper:

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 that 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.


Cover CESifo Working Paper No. 7962