Ex-Goldman HFT Trader Makes Blockchain History Raising $200 Million In Tezos ICO In 4 Days

Tyler Durden's picture

Who needs IPOs when you have blockchain, and a lot of people willing to throw good money, or rather cryptocurrency, after bad something totally unknown.

Presenting the Initial Coin Offering (ICO) for Tezos, a blockchain startup which has tapped a virtually unlimited source of funding, and has raised over $200 million in just four days. Tezos is already the biggest ICO in history and with the sale scheduled to continue for another 8 days, may end up raising over half a billion dollars.

Recently, blockchain startup Block.One hit a record funding, raising around $185 million in the first five days of the crowdsale. Prior to that, another startup, called Bancor, netted nearly $150 million in contributions during the first three hours of its ICO.

What makes Tezos different from a recent surge in similar such offerings, is that this ICO is not based on Ethereum and instead operates on an entirely new blockchain, a "self-amending cryptoledger" that rewards developers who upgrade the network's protocols and allows for "seamless," consensual upgrades of those protocols (read the white paper here for more detail). Which, as Mashable points out, makes it a competitor to Ethereum.

Established by a husband and wife team, Tezos is an independent smart contract system built as an alternative to Ethereum. The platform has been under development over the last three years. Arthur Breitman and Kathleen Breitman used their extensive experience to develop the new blockchain solution.  

And here is another striking fact: Arthur Breitman previously worked at the high frequency trading desk at Goldman Sachs and served as an options market maker at Morgan Stanley. Meanwhile, Kathleen Breitman is a former management associate at Bridgewater. The startup is focused on "transparency, security and governance by consensus as fundamental design goals."

The Tezos tokens, Tezzies or XTZs, can be purchased with both Bitcoin and Ethereum, and as of this morning, there is no scarcity of demand: Tezos has already raised 53,575 BTC and 273,838 ETH, for a total of approximately $210 million at current prices. This already makes the Tezos ICO the largest in history (overshadowing the recent Bancor ICO, which raised $153 million). It may also explain the ongoing drop in ETH prices observed in recent days.

Another important point: unlike many recent ICOs, the Tezos ICO is uncapped, meaning there's no upper limit of funds the company can raise, what is likely to drive a widespread distribution of tokens. Initially the token sale was planned to start in the middle of May, but at the last minute was postponed to June.

The only limit is time, and with approximately 8 days and 14 hours to go, the ultimate amount Tezos will raise will likely be a lot bigger than it is now. 

As Reuters reported in May, Tezos received investment from venture capitalist Tim Draper, which attracted additional interest to the startup. Draper is also going to invest in the US-based Dynamic Ledger Solutions Inc, the developer of Tezos. The details of the investment were not disclosed. According to Coinspeaker, Draper first unveiled his desire to take part in Tezos’ token offering in May, thus becoming the first prominent VC investor to participate in an ICO. Some industry players are still concerned about the possible risks of token sales and the lack of regulatory control.

Draper believes that by investing in the startup he will set an example for other investors to embrace this new type of funding. Another well-known American entrepreneur, Mark Cuban, unveiled that he is going to participate in his first ICO.

Of course, the interest may wane in the coming days, and the ultimate amount Tezos will raise depends on the highly volatile Bitcoin and Ethereum cryptocurrencies. As Stan Schroeder points out, the price of both BTC and ETH has fallen considerably in the last several weeks; if they were anywhere near their all-time highs (which they were around the time of the Bancor ICO), Tezos would already be sitting on more than $250 million. It is unclear if the recent drop in cryptos is linked to the giant ICO.

Another notable similarity between Tezos and Bancor is that both startups are "incredibly ambitious, with intent to change the cryptocurrency landscape forever. Some hot names are on both companies' teams; for example, venture capitalist Tim Draper has invested in both companies. And both companies have been criticized in the cryptocurrency community for letting their fundraisers collect insane amounts of money."

Many have already warned about the easy and facility with which ICO can raise funds, and Tezos is no different: it is worrisome to see startups that have barely launched their first finished product raise hundreds of millions of dollars.

"Tezos (...) do have a solution that could mitigate some of the issues seen with other blockchain tokens through their governance model," Charles Hayter, CEO of CryptoCompare, told Mashable in an emailed statement. But he, like many others, warned that uncapped ICOs are problematic. 

 

"ICO's which are uncapped are dangerous as they imply and show a complete disregard for corporate discipline - and to an extent an element of disrespect for the investor. The question that needs to be asked is can the job be done with less money (...) and that throws a spotlight on the fairness & truthfulness of the proposition being offered," he said.

Yet despite growing criticisms, Tezos' ICO is proof that token crowdsales are still incredibly hot, both for traders looking to earn a quick buck by flipping new tokens and for crypto-related startups looking to get funded. Over-the-roof valuations will make it increasingly hard for these crowdfunded startups to prove their worth, and as Schroeder warns, "it feels like some sort of crash is inevitable, but it hasn't happened yet."

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Squid Viscous's picture

a mash up of Tesla and Bezos?

brilliant!! how can I buy some??

shooting for 25% of my net worth in fake digital money,

 

BaBaBouy's picture

Another Funny Money ...

HaHaHAHAHa

... What are we up to now, like 700+ ...

nope-1004's picture

Over 800 digital currencies available today.  All claim limited "mining" of coins.

Would it really limited mining then, if 800+ version of gold were invented?

 

BaBaBouy's picture

Coinz 'R US ...

How many types of Magic Elikser Snake Oils did they market in the 1800's ???

StackShinyStuff's picture

How long before we hear:  Aaaaaaand....it's gone

silverer's picture

We won't. Because if you think about it, it was never really there.

Manthong's picture

 

I seem to recall some crusty old SOB saying something about “irrational exhuberence”.

If this isn’t dot com 2.0, nothing is.

losses mount's picture

Does this couple get to keep the money raised?

What do you get for your investment in this coin?

I've got to go to bed now so I won't be able to see any reply until morning, thank you in advance.

Pladizow's picture

$10,000 invested in gold in 2010 = $10,000 today.

$10,000 invested in Bitcoin in 2010 = $200,000,000 today.

Now make your stupid gold bug comments!

mtl4's picture

Tulips were a great thing and grew way more faster than PM's if you had what people wanted back then, same thing with money losing Dot Com stocks, but eventually it does go away when folks realize the emperor has no clothes.  When Mark Cuban says he's doing an ICO, that tells me stay the heck out.......somethings gonna break.

Ahmeexnal's picture

But...really...Bitcoin is UNIQUE. There may be thousands of cryptocurrencies, but only one unique Bitcoin....just like every turd is absolutely unique, no two are alike.

Creepy_Azz_Crackaah's picture

Dude... **Everybody** knows that the valuable digital 1s and 0s "backing" Bitcoin are WAY better than the 1s and 0s backing the other speculation vehicles. Uhhh... I mean other currencies.

38BWD22's picture

 

 

I'll keep my BTC but pass on Tezos.  No gracias.

thisandthat's picture

So they actually named their coin Tezos? The irony is tesos is a portuguese jargon (plural) for pennyless... which I guess is what these mup.. err.. investors will eventually become.

City_Of_Champyinz's picture

I would guess sooner rather than later, especially if they just keep creating new made up coins one after the other.  This is so incredibly stupid.

Erek's picture

A start-up by a Goldman-Sucks boy?

Be very careful.

tmosley's picture

How many competing currencies were there in the US in the free banking era?

quesnay's picture

16 or so (13 state issued, plus British pound, plus gold and silver).

There are around 1000 crypto-currencies and climbing.

el buitre's picture

At least the supply of rattlesnakes was limited.

Crypto-World-Order's picture

Im up 800+% hows gold and silver doing?

 

 

L

O

L

 

Bitchez

silverer's picture

Keep buying that stuff. Really. I hope you make out well.

aloha_snakbar's picture

800% of nothing is still nothing, stupid common core cunt...

Crypto-World-Order's picture

You sound mad old man, dont blame you. If I was as stupid as you were by listening to william devane I would be pissed off too. 

 

Maybe when you are 80 and in a nursing home, gold and silver will reach 1400 and 30 again

 

aloha_snakbar's picture

Dont know what you are blathering about there Pops... hopefully you did not spend any real money on your imaginary money...LOL...

Crypto-World-Order's picture

Sure did and up 800%, want to buy some ms 66 st gaudens? I need a sucker to unload them onto.

aloha_snakbar's picture

Here... in case you missed it in school...

800 x 0 = 0

Antifaschistische's picture

If the world has $100.   and tinkercoin comes along...and someone buys $50 worth of tinkercoins.  The $50 is not destroyed.

Now the world has $100, and 50 Tinkercoins.

I'm fine with that...what do I care.  Just know, that inventing electronic fiat, is just that.   Mr. Tinkercoin makes fun of the gold guys.   But what's funny to me, is some of the "REAL MONEY" people...like Max Keiser preached for years.   Now, preaches tinkercoins and refuses to call it fiat.   and I'm not an anti-fiat guy.  But the tinkercoin world is doing just that...inventing massive piles of non-gov fiat.   Which I may use some day to sneak a load of cash out of the country...but that's the value of electronic fiat.

cheech_wizard's picture

>I'm up 800+%

So that Viagra prescription is working out for you... Congrats!

The Ram's picture

People are not distinquishing between the 'Block Chain' as a technology vs. all these 'coins'.  Like the technology supporting the .Coms, the technology is going to be revolutionary, but investors are thinking they can pick winners and losers between all the coins.  As we know, a few people did make big money in the .Com era, but many lost big time.  I think it is better to let the dust settle a bit unless you have 'coin' to lose.  I would rather buy physical silver in the form of junk silver and wait.  use the profits in a few years to buy some 'digital coins' when the herd has been sheered.  This whole coin IPO reads just like the .Com bubble 2.0.  Yes, digital coins may play a huge role in our economy as the .Coms have, but one does not have the ability to sort the winners and losers at this point.  'Be patient, Grasshopper.  The universe will come to you if you let it.'

Raffie's picture

Time will tell if its boom or bust.

Also tezos token will be locked up for 4-7mo before people can flip them.

KIN is the ICO I am going to get into. KIN will power KIK's economy.

ejmoosa's picture

With no real barriers to entry in this field, methinks a lot of folks are gonna be losing a lot of some type of currency.  

There is simply no limit to cryptocurrencies.

Soon they will be as plentiful as userids...and those are worth pretty much nothing.

AGuy's picture

Funny how its illegal for US citizens to create currency & coins, but its OK for a Squid-billy to create a new Crypto Currency.

http://www.nytimes.com/2012/10/25/us/liberty-dollar-creator-awaits-his-f...

"Bernard von NotHaus, and he is a professed “monetary architect” and a maker of custom coins found guilty last spring of counterfeiting charges for minting and distributing a form of private money called the Liberty Dollar."

LawsofPhysics's picture

So, primary dealer bankers/traders are making a killing in the digital currency space? (don't kid yourself, another "club member" here)  Now who could have seen that coming? When your government forces you to pay taxes in electronic currency, you will know the truth.

hedge accordingly.

Bank_sters's picture

How many cryptocurrencies will there be?   Stay tuned for another episode from the house of fiatscos.

 

ICO- Intial Coin Offering.  LOL

One Ring to rule them all, One Ring to find them,
One Ring to bring them all and in the darkness bind them

silverer's picture

Same as inflation. All "limited issue". All 156 million of them. Pick a block chain, any block chain...

dasein211's picture

I skipped this and will buy more bitcoin and dash as it dips. Spending so much money on an unproven blockchain is nuts. Ethereum ran into some stiff headwinds in its code with the DAO. It wasn't an overall killer but it did prove that things can get ahead of themselves. I'll wait to see how the code works out and how good this really is. I researched into this one and decided it was a.) late to the game and b.) Dash's evolution platform is out later this year and is the next serious disruptive technology that incorporates blockchain while solving many governance issues. Do yourself a favor and research what Dash is doing. It's incredible. Don't be surprised if it jumps ahead of all the blockchain coins.

RagaMuffin's picture

The Crypto currency space implosion will be a hell of a fuse for gold..........

Soul Glow's picture

Agreed, but that fuse is long.  Gold and silver has lost last years momentum with cryptos and stocks back at the top of the trash heap.  Shit, people are still throwing their earnings away buying 30 yr mortgages at the highs as well.  We will have to either wait for a bank to be overleveraged - and not bought out by a Warren Buffet type - or a geo-political event.  And I see neither on the horizon.

So keep day trading if you want to pick pennies up in front of a steamroller, keep stacking if you are patient enough to accumulate real wealth, or keep buying bitcoin if you have the stomach to ride epic swings, there won't be a huge crash for a couple years.  I do think that the stock bull will top out late summer though.

RagaMuffin's picture

Oddly perhaps, I do not find a rising equity market and rising gold prices mutually exclusive when in the context of a falling currency

Soul Glow's picture

I won't call crypto-currency a bubble yet, but it has become a pump and dump scheme for the banking majors.  They will throw money in and take it out quickly, skimming off the top just like they do with stocks.  This will temporarily create a floor, as they will be buying the dips, but also create a ceiling, as they will dump when their algos tell them the price is worth selling.  This would mean Cliff Highs $13k bitcoin target is out of the picture, not that the price will go higher though.

silverer's picture

Hey. I've got what you need. It's a hand full of sand. You must realize, there's a limited amount of sand on earth...

Soul Glow's picture

Let's get into the glass making business. We can start with Saudi Arabia.

Snaffew's picture

it is without a doubt a bubble of epic proportions---the main indicator is the plethora of articles out there convincing people how this is a new paradigm and this is not a bubble.  Anyone and everyone are coming out with new cryptos every day and their market caps are soaring by the hundreds of millions---how is this sustainable with all the other investable "assets" out there.  Soon, stocks will be worthless and only cryptos will have 'value".  there is not enough capital in the world to support all of the combined manias out there.

Sizzurp's picture

Lately he is saying 18.8k per BTC. The biggest problem with this market is low barriers for entry.  There is no large technological hurdle to jump over here, and now that real money is being made, these ICO's will be coming out like crazy.  All of them will have a great story to tell.  The similarities to the dot.com era are startling. Still, the first few internet companies that had some staying power did pretty well. 

AGuy's picture

I am leaning to crypto currencies becoming the next great Ponzi scheme. Ponzi scheme was based upon using Stamps as currency. so its not much of stretch. The Early investors will make all the money and the late investors will be left holding an empty wet paper bag.

Funny how a digital currency has the all time longest transaction wait time. Even Paper check clear faster:

https://blockchain.info/charts/avg-confirmation-time

Hardly any transactional traffic:
https://blockchain.info/charts/n-transactions

Unless some major fixes happen, no way Bitcoin handle real-world currency tractions. It would days just to purchase a cup of coffee.

I_rikey_lice's picture

"Unless some major fixes happen, no way Bitcoin handle real-world currency tractions. It would days just to purchase a cup of coffee."

 

Ok then, how and why the fuck will Burger King in Russia start accepting Bitcoin? What are the transaction fees to buy a burger and fries and how long until the transaction is finalized. It makes no sense to me how this can work. What am I missing?

AGuy's picture

"Ok then, how and why the fuck will Burger King in Russia start accepting Bitcoin? What are the transaction fees to buy a burger and fries and how long until the transaction is finalized. It makes no sense to me how this can work. What am I missing?"

Have you been to a Burger King Lately, How about in the past year? Nobody goes to BK any more! Likely very few of the very few BK customers want to use BTC anyway. Its possible that after a long BTC transaction wait, the Customer just ends up using cash instead.

zerocash's picture

Most shops that accept Bitcoins use a payment processor such as Bitpay that makes the transaction instant. They take care of the confirmation period and the merchant gets credited immediatly. For a fee that is lower than credit card fees (and credit cards tranactions also take a while to process, which the customer notices nothing of as it happens on the backend).