Almost 33% of the investors surveyed believe that the first Coin Offering (ICO) they invested in was misleading them and found the South Korean business giant Hanhwa Group-supported crypto disclosure platform Xangle. However, 56% of all respondents said they would make another investment if they had more information and research to help them.
Investors are “excited” to put their money into the booming crypto industry, causing that industry to grow as more crypto projects are created, but a number of investors said they had the last thing they wanted – to be kept In the darkness of the project, they feel that information is being withheld from them, or in the worst case, they find that their money has disappeared along with the company overnight. ” wrote the Xangle team in their ICO Retail Investor Sentiment & Outlook 2020 report. “This may have turned them off for the crypto industry indefinitely.”
To better understand the experiences of retail investors, Xangle surveyed 600 people who live in the US and who invested in an ICO between 2017 and October 2020.
They found that 32.7% of investors believed the ICO deceived them or withheld information from them. On the positive side, half of all respondents did not share this experience. Still, 17% were unable to determine whether or not they were deceived, which means they did not know enough about the project or the industry to determine if the project deceived them or withheld information.
“These answers reveal a much bigger problem with transparency and information asymmetry,” the report said. “Information asymmetry leads to investor confusion about projects and a perception that they are willingly deceived about the information provided.”
Of the 33% who felt deceived by their ICO, 54% said the ICO founders should be held criminally liable for their actions. Meanwhile, 19% believed the opposite, but “nearly 30% of respondents who are unsure whether it was criminal negligence or fraud indicate that there is much more to be done to educate investors.”
22% of those surveyed invested in an ICO for the first time in the year of the ICO boom in 2017. Most of them, 35%, first invested in 2018, followed by 26% in 2019 and 9% in 2020. “This shows a continued interest in ICOs, with new investors adding every year,” the report said.
The majority of respondents (55%) invested to make more money, while almost 23% wanted to invest in the idea behind the project, almost 17% in the technology, and around 5% said they wanted to be an early adopter. Nearly half invested less than $ 1,000 to test the water, while 30% of respondents invested between $ 1,001 and $ 10,000. Only 2% invested more than $ 100,000.
However, prior to their investment, these respondents were least reliant on proper research, the report found, finding that “nearly half” [of] Those who have invested made their decision based on word of mouth rather than their own research. In other words, 46% found out about the ICO they invested in from friends, family or employees. Another 19% found out about it on forums. 18% from social media and 15% from news articles, television and other media.
Half of the previous investors are still investing in crypto projects and the other half are not. “If 50% of your customers tried your product and never returned, that’s a big red flag that needs to be changed,” the report said. Respondents felt that a lack of regulation, awareness and security is holding back the crypto market, followed by a lack of transparency and use cases. They find that it takes more accountability, investor protection from government and regulators, more information, and more unique projects to increase investor buy-in.
In addition, 30% of respondents had positive experiences with investing and said they would do it again and not change anything, while 11% responded that they would never invest in an ICO again and regret having done so at all.
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