A South Korean patented financial model launched on April 23 will allow investments into Initial Coin Offerings without having to worry about scams and without the need for an over abundance of regulation.
ESC Lock is investment model equipped with an investor protection device.
ESC Lock combines an escrow system with ICOs lauches that locks investments of investors as well as the cryptocurrency issued by ICO companies. This protects both the investor from being scammed as well as the ICO from having investors pump and dump the value of the tokens or currency.
Out of 902 ICOs conducted in 2017 276, which is a touch over 30%, failed to reach any sort of commercialization after achieving their investment goals – meaning they just “took the money and ran”. ESC Lock was specifically created to address these types of issues within the ICO marketplace.
ESC LOCK deposits limited amount of the invested money to the ICO company based on specifical benchmarks. If the conditions of the benchmarks are not met in full, the investment is returned to the investor. This doesn’t completely eliminate all risk, but lowers the chance of scams and eliminates the ability to take the money and run.
Conditions for deposit of the investment to the ICO company are:
- being listed on an exchange 6 months after the ICO
- maintaining a fixed price 1 month after listing
- achieving over 50% of the escrow amount through a standard ICO
The exchanges where the listings are recognized are limited to only the top 30 exchanges as established by an ESC Lock review committee.
Additionally, on top of the the basic conditions, investors can set further benchmark options such as development and business progress to further secure investments.
To prevent any sort of frauds from increasing and decreasing of values Ether, which is currency the dominant platform for ICO’s will immediately converted into cash and deposited it into a bank escrow account.
The belief is this structure will allow investors to receive returns on the amount of ETH invested even if the ICO fail or the value of ether drops after entering into the ICO.
Unfortunately this option will not be offered to all ICO’s but rather only select ICO’s that and ESC Lock review committeee has pre-qualified through “a strict pre-verification process”.
Hopefully, although it uses patented technology, this will open the door for similar types of technologies that will not be so limited and based solely on a centralized body to screen – but rather to protect all investors in all ICO’s.
This is however one of the first solid attempts a self regulatory body within the ICO community.