Australian fintech startup HCash just revealed it raised $53 million through an ICO in July
Initial coin offerings (ICOs) are polarising the business world at the moment, but one Australian company has made hay while the sun shines, raising 21,000 Bitcoins worth of capital.
Blockchain security startup HCash, which is developing its technology in conjunction with Melbourne’s Monash University, has revealed to Business Insider that the round closed on July 15. Based on that day’s exchange rate, the 21,000 Bitcoins were worth $53 million.
ICOs are a method of raising funds where a startup sells electronic tokens or “coins” to buyers that are betting that the business will do well in the future, thereby raising the value of the token. Unlike traditional venture capital, no equity is distributed to the token buyers, thereby getting around securities regulations.
Currently HCash’s electronic tokens in circulation are worth $33.7 million in total.
With cryptocurrencies like Bitcoin and Ethereum being born out of ICOs and booming this year, the practice has gained glamour among those looking for a quick investment into a high-growth startup. Celebrities like Paris Hilton and Floyd Mayweather have even publicly endorsed ICO issuers on social media, which has earned the wrath of the US corporate regulator.
Many finance experts have deemed the practice dangerous as there is insufficient regulation to ensure the authenticity of ICO issuers and whether the buyers can be potentially misled about the potential of the startup. Anyone, including inexperienced investors, can buy tokens in an ICO.
Jordan Belfort, the banker dubbed The Wolf of Wall Street, called the digital coin craze the “biggest scam ever”, while Forexlive agreed with the Chinese government’s shutting down of the practice this year.
“You just invent a token with no underlying assets that also conveys no ownership interest and sell it to suckers,” Forexlive’s Adam Button wrote.
“Traditionally the reason this didn’t work is that people didn’t buy that kind of thing. If you wanted to get real money, you need to go through all the hassle of listing stocks on an exchange. Now the cryptocurrency boom will let you raise millions of dollars by selling non-ownership in a yet-to-be-executed idea.”
HCash says it’s fair dinkum
HCash, which went through Blockchain Global’s accelerator program, launched its coin offering on June 28, 2017.
“As of today, the market cap is roughly $330 million, give or take,” HCash business development manager Andrew Wasylewicz told Business Insider.
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