Reverse ICO

A reverse ICO is an initial coin offering carried out by a company that already has a working product, customers or revenue, rather than by a new team with only a whitepaper. The company issues a token tied to its existing service, either to raise capital or to move parts of the business onto a blockchain and share control with users. The best-known example is the Kin token sale held in 2017 by Kik, the messaging app. Supporters argued that reverse ICOs were less risky than start-up ICOs because the issuer had a track record. Regulators did not see much difference: in 2020 a US federal court agreed with the SEC that Kik's sale was an unregistered securities offering. The term was popular during the 2017–2018 boom and is rarely used now, as later fundraising moved to formats such as the initial exchange offering.