A new article from Diginomics project "Securities Offerings Through Initial Coin Offerings“ by Professor Lars Hornuf, Theresa Kück and Armin Schwienbacher from SKEMA Business School is published in the journal Small Business Economics. The authors of the article, titled "Initial Coin Offerings, Information Disclosure, and Fraud," study the extent of fraud in initial coin offerings (ICOs), and whether information disclosure prior to the issuance predicts fraud. They document different types of fraud, and that fraudulent ICOs are on average much larger than the sample average. Issuers who disclose their code on GitHub are more likely to be targeted by phishing and hacker activities, which suggests that there are risks related to disclosing the code. Generally, the authors find it extremely difficult to predict fraud with the information available at the time of issuance. This calls for the need to install a third party that certifies the quality of the issuers, such as specialized platforms, or the engagement of institutional investors and venture capital funds that can perform a due diligence and thus verify the quality of the project.

The article can be found here.