Rushing the Elite Club: Participating in Investment Cooperations

Journalist and crypto investor Maxim Rubchenko speaks about joint purchases of tokens and possible alternatives.

The crypto market is in turmoil for the third month as an uncertain growth of exchange rates is quickly replaced by a new collapse. The former euphoria of the investors is now a bleak shadow of its former self and statements that the price increase is about to resume with newfound force are being heard less and less.

The last refuge of crypto investors in these conditions is participation in ICOs, more precisely in the presales of promising tokens. The listing of a new coin on the exchange, as a rule, is accompanied by a sharp short-term increase in its value, even if the market as a whole is in decline. The earlier one enters the project, the more profits they can get. Therefore, participation in a pre ICO can bring dozens or even hundreds of percent of profits.

The problem is that the organizers of the most promising ICOs, as a rule, set very strict requirements on the minimum purchase volume for presale participants. This may refer to Bitcoins or Ethers in the amount of tens and hundreds of thousands of dollars. Average crypto investors, as a rule, cannot afford such expenses, which forces them to pool financial resources for the the the the the joint purchase of tokens. This is quite normal, especially since such cooperation is most often carried out on the basis of Telegram channels analyzing the token.

Recently the cooperation of crypto investors, however, has gained a frankly unhealthy character. The reason for this was the ICO of the Telegram Messenger, which decided to create its own blockchain platform, the Telegram Open Network (TON) with its Gram cryptocurrency.

The investors are, of course, attracted by the company and its creator Pavel Durov, the transparency of the development plans of the project, and, finally, the popularity of the messenger itself. The main reason for the rush was the unprecedented level of requirements for presale participants. First, the minimum amount of investment is $20 million, a record in the history of ICOs. Secondly, in addition to having a sufficient amount of money, a potential investor must be a person known in the business world. Thirdly, according to unofficial information, Telegram refused to sell its tokens to persons who had fallen under any sanctions lists from the United States, the United Kingdom, the EU, and the UN Security Council, as well as their relatives. The agreement with investors indicated that it is forbidden to use tokens to violate sanctions and money laundering. “Any illegal use of the Gram cryptocurrency by unscrupulous participants may violate the normative acts adopted in the UK, the US, and other countries aimed at combating the financing of terrorism and money laundering. This can seriously affect the global reputation of the TON blockchain,” the document says.

All this turns the Telegram ICO into an elite club for the chosen few, and not only into a potentially very profitable, but also a very prestigious project. The full list of investors in TON is not disclosed, but according to unconfirmed reports, the media knows that Roman Abramovich, co-founder of Qiwi Sergey Solonin, co-founder of Wimm-Bill-Dann David Yakobashvili, and even Vitalik Buterin have invested in the project. Bill Gates, Richard Branson, Mail.Ru Group co-founder Yuri Milner, and a number of large funds from the Silicon Valley are also said to be among the buyers of Telegram tokens.

It is no wonder that thousands of potential investors around the world are looking for ways to circumvent the established restrictions and become TON investors, bombarding with requests for the assistance all those familiar or potentially familiar with Pavel Durov, grabbing onto even the most doubtful of possibilities.

The Telegram channel “The Bearded Man’s Gold” last week held an indicative experiment, announcing the opportunity to invest in TON and form a pool of investors with an entrance fee of $10,000. Within one and a half hours after this announcement, the organizers of the action received proposals from potential investors for a total of $1.5 million. “99 out of 100 investors have never corresponded with me, did not communicate personally with me, they do not know me in person,” says the author of the channel Nikita Kolmogorov. “When I said that only $1 million was needed and there would be the second round of selection, people who had already applied for it said that they were ready to pay a premium for a 100% chance of being in the pool. The most horrifying thing is that people wrote that they were taking out loans and money in debt, just to enter our pool.”

The problem is that today social networks are teeming with proposals for participation in the Telegram ICO. Almost everything is pure fraud, but people are ready, without any guarantees, to give up tens of thousands of dollars to complete strangers. They are confident that the potential profit of such investments justifies any risk.

This is a huge mistake. It is not even that the probability of losing money in such schemes is close to 100% without the possibility of compensating for losses by any potential profit. And not even the fact that the profitability of such investments is not yet very obvious. First, the opacity of the presale scheme raises a lot of questions about whether it is possible to really participate in buying Gram with the help of some investment cooperations. It would be strange, considering that earlier Telegram refused to cooperate with well-known people and structures, as well as with investors from a number of countries.

Secondly, information about the secondary turnover of Gram is still very vague. It is known that the presale participants undertake not to sell coins during a long period of freezing, but Telegram does not report on plans on listing their coins on any exchanges. Moreover, Pavel Durov warned about the possibility of failure of the project, promising, in this case, to return the money to the investors. The question arises whether the participants of all these semi-legal cooperations will have any rights to claim for refunds? And will the investors be able to find the organizers of such cooperations in late 2019, when the TON project is launched?

In general, it is a matter of taste. The only thing that is crystal clear is that dipping into debts for buying Grams is categorically unadvised as it will not yield profits under any circumstances.

As for cooperations hammered together for participation in other presales of tokens, under today’s market conditions, they are also unlikely to justify the risk of “getting dumped.” On the one hand, investors’ enthusiasm for all ICOs has now dropped significantly, as both the duration of the placements themselves and the terms of token listing on exchanges have increased. On the other hand, with today’s negative trends on the crypto market, the surge in the value of tokens after their listing on exchanges is becoming more modest. And if last fall the typical ICO scheme looked like “two weeks of a presale, a month for an ICO, and a month to enter the exchange with a price jump of several thousand percent,” today it is already “a month of a presale, six months for an ICO, and 30–40% price increase three months after listing on the exchange.” In other words, having given your money to an unfamiliar guy for participating in a presale, you will be able to rely on a modest profit by the standards of the crypto market, in only 9 to 10 months. If, of course, during this time the market returns to growth.

In fact, this is no longer a gamble, but a long-term investment. But there is a simpler and less risky way for purchases of tokens “in the long term” in today’s market, and that is to buy coins a few days after listing on the exchange, when their price after the standard price spike drops below the placement price, almost to the level of the presale.

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