Description
Please read the Filecoin case study (see HBS Coursepack) and answer the following questions with substantive answers in a cohesive essay.
1. How did Filecoin conduct its ICO?
2. How is Filecoin's ICO similar to and different from:
a) an equity IPO?
b) a crowdfunding initiative on, for example, Kickstarter, Indiegogo, GoFundMe?
3. What are the pros and cons of Filecoin conducting a fundraising through an ICO?
4. Why should investors be attracted to Filecoin?
5. Why should be wary of Filecoin?
6. Why are regulators encouraging or opposing ICOs?
7. What have some regulators done in response to ICOs?
Explanation & Answer
View attached explanation and answer. Let me know if you have any questions.
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Filecoin Case Study
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Introduction
Filecoin is “a decentralized storage network designed to store humanity’s most important
information” (Filecoin, 2021). It enhances web security and efficiency by providing a
decentralized data marketplace, cryptocurrency, and protocol. The project, developed by
Protocol Labs, has grown to become the largest token in terms of sales since the release of its
first coin offering for use in 2017 (Eaton, 2018). It launched its ICO in 2017 with Coinlist, a new
platform it created in conjunction with AngelList, which is a startup that connects investors and
startups (Kim, 2017). Filecoin was the first firm to run its token sale through the Coinlist
program. This paper addresses several questions that arise from the Filecoin project.
1. How did Filecoin conduct its ICO?
Filecoin ICO represents one of the largest token sales, with revenues of over $257
million. A combination of the pre-sale and its ICO makes up 10% of Filecoin token allocation.
According to Eaton (2018), Filecoin’s ICO was conducted through making it open for accredited
investors under the U.S. legal framework. Generally, the firm allowed investments in its ICO
from investors with incomes of $200,000 and above. Further, Filecoin also allowed investments
from investors with a net worth of at least $1 million. The project worked to meet standards with
its ICO, even though many felt disenfranchised by its unfavorable investment decisions,
particularly small-scale investors (Eaton, 2018). Filecoin enabled its investors to earn a discount
for the initial coin purchase by allowing them to invest in tok...
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