THE ROLE of bounty hunters in initial coin offerings (ICOs) has been thrown into the spotlight following a dispute over payments made from the EQUI fundraise.
EQUI – co-founded by entrepreneur Baroness Mone and her venture capitalist partner Doug Barrowman – launched an initial coin offering (ICO) in March to let retail investors acquire stakes in or lend to early-stage businesses using EQUItokens.
The ICO was expected to last for six weeks before being extended to 30 June and now reports have emerged that it failed to hit its target, while some of those who helped promote the campaign – known as bounty hunters – are unhappy with how much they have received in return.
A spokesperson for Baroness Mone said it was agreed that bounty hunters would be paid two per cent of the funds raised, but a dispute has emerged over whether this should be the total figure or what was left after investor refunds.
Bounty hunters have become a popular way to help ICOs reach the public, with individuals paid in tokens or cash to promote campaigns to their contacts such as on social media.
Stephen Findlay, co-founder of BondMason, who launched a digital currency in January for those living in areas with high inflation or under-developed banking systems, said he used bounty hunters for his campaign.
“We provided a bounty for developers looking to find bugs in the code base,” he said.
“This is common too. We paid them as agreed regardless of the size of the eventual ICO.”
P2P crowdbonds platform Crowd for Angels has also run its own ICO, but took a different approach to promotions.
“We did not use a token bounty campaign before or during this initial campaign and more importantly, we did not advertise or promise bounties prior to the generation of the token,” Andrew Adcock, chief marketing officer for Crowd for Angels, said.
“After the ANGEL token was generated we did do an airdrop and began distributing tokens to users who engaged with content, the platform, our social media, etc inline with the whitepaper. This ensured that those participants who took part in a ‘bounty’ were rewarded accordingly.
“We did allow traditional introductions from advisers that would be paid in fiat. This is in line with the traditional crowdfunding model.”
He said bounty campaigns are important in the ICO world as they do help build up a ‘community.
“They are only effective when used in a methodical manner and not simply to get as many people as possible,” he said.
“Good bounties can include translations, introductions, design work, testing, all activities that are important to the company and progress the business forward. Any firm who is seeking to offer a bounty should have the reward prior to the bounty, reward the users in a timely manner and importantly, communicate the bounty clearly.”
For now, EQUI has promised investors a new globally-focused brand, to be launched in the coming weeks.
EQUI has said bounty hunters will be paid this week, but they are unhappy that this will be paid based on the final figure after refunds.
Thomas Hulme, cryptocurrency specialist at Mackrell Turner Garrett, said the lack of regulation in this area may affect any legal view on this sort of situation.
“As ICOs are not regulated, there are no set rules about promoting ICOs, which is what bounty hunters do,” he said.
“There is current legislation that regulates financial promotion of a regulated financial products.
“The courts may deem ICOs to fall into the remit of the current financial promotion rules if it went to court and then that may affect the work bounty hunters do.”
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