What’s the catch?
As I write this there is a live opportunity that is available for savvy traders to buy the ICONOMI (ICN) token on exchanges for slightly less than 0.0017 Ether. Next month ICONOMI will buy back their own token for 0.0019 as part of a restructure.
That represents a profit of about 11–12% in a couple weeks.
So what’s the catch? Why is this arbitrage opportunity still around?
Well to answer that we need to break things down and look at things in parts. Even though Iconomi has been around for awhile it is not widely talked about nor does it have a huge online following. Not many are tracking the progress of ICN since it has fallen out of the top 100 coins on coinmarketcap. I believe that due to the current fear and uncertainty in the market people are also taking a much more cautious and sceptical approach on announcements that are made.
When there are many well known Crypto advocates and VC’s saying Bitcoin will hit 10x, $200k, $20k or that Crypto markets will go to trillions in market caps. Who and what do you believe?
Each area will be analysed and in the end it will be up to each of us to decide if this is a good opportunity or scam.
- Iconomi Background
- Platform Development and Progress
- Assets Under Management
- The Buy Back Offer
1. Iconomi Background
ICN was one of the earlier ICO’s on Ethereum that ran for 5 weeks, from August 25th 2016 to September 26th 2016. They raised just over $10 Million USD.
The team is made up of real people:
- Tim M. Zagar — Co-founder & CEO
- Jani Valjavec — Co-founder
- Matej Tomazin- COO
- Miha Vidmar — CTO
I know because I met some of them at one of their roadshows and had a chat about their plans and asked them a few questions.
The team members previously ran a Bitcoin exchange company called Cashilla, a fully licensed euro and bitcoin payments processor. With operations since 2014 it does show the team has knowledge and backgrounds in crypto.
2. Platform Development and Progress
This is an area that Iconomi is not getting enough credit for in the crypto community. Unlike alot of the top 100 crypto’s Iconomi actually released their platform quite early back in October 2017. It took them about a year of development to get their crypto fund management platform out. Since then they have steadily grown their ecosystem by signing up over 30 fund managers.
ICN token price however has not performed well and is currently down 90% compared to ETH from the ICO. You would have done much better just holding Ether.
Another positive for Iconomi is that the platform has demonstrated revenue generation. In their last financial report Q2 2018 the revenues totalled about $400k.
This is good for holders but has made things messy for US citizens. ICN is in a grey area of crypto where it is unclear whether it is trading as a Security or not. ICN is not supposed to be offered to US citizen’s as a result. Another reason why western media may not be covering Iconomi.
In Q2 another huge milestone was reached when they implemented EUR Fiat Gateway to the platform. There are lots of hurdles to overcome for crypto exchanges to have this functionality to satisfy strict bank AML/KYC policies. That Iconomi has managed this should signal that a strong and robust compliance procedure is in place.
The team is also quite active in communicating with the community. Regularly putting out reports on their development progress. Many other projects go MIA for a long time and when you do hear from them it’s usually some short tweet about a partnership, not much real substance.
3. Assets Under Management
Iconomi releases quarterly financial reports highlighting all AUM. In their last report Q2 we can see that they have a significant amount Ether holdings at 114,939.
If that wasn’t enough they still have more under the CCP fund.
That is a total of 114,939 + 54,212 = 169,151 Ether.
Fun Fact: The Total Market Cap of ICN is $35 Million USD (18/10/2018) whereas the Book Value at the end of Q2 2018 was $148 Million.
The market for crypto has since crashed but the book value is still worth a huge sum more than the current market cap even if you make up a theoretical 80% crash scenario.
Oh yeah and no need to take their word for things. Their books are audited by Big 4 Accounting firm Deloitte!
4. The Buy Back Offer
Iconomi recently announced a change in the structure of the ICN token.
From their medium post:
ICN token holders will be able to exchange their ICN tokens for tokenized shares in a joint-stock company presented as eICN tokens. This new structure brings legal clarity for all stakeholders.
As part of this initiative for holders that do not wish to participate and convert to eICN, they have also announced they will buy back your ICN at a set rate of 0.0019 Ether.
From their eICN FAQ post:
Will you buy ICN at .0019 even if exchanges don’t delist ICN? Which exchanges would have to delist ICN for you to buy at that floor?
Yes, the option to sell your ICN to ICONOMI at the rate of .0019 will be available even if exchanges don’t delist ICN. This option will not require verification on the ICONOMI platform.
Considering that ICN is trading under 0.0017 Ether on most exchanges the offer is quite fair. Those wishing to take up the buy back will not have to sell at current prices and can wait until next month for details on how to sell to Iconomi at 0.0019 Ether. This part is unknown at this stage. Most likely you will need an account on their platform.
For opportunist traders you could buy on market ICN at below 0.0019 Ether and then sell these back to Iconomi next month. The profit of doing that would be equal to 11–12% with current ICN selling at 0.0017 Ether.
WARNING: Please do not take this as financial advice. Do your own research and see if this arbitrage opportunity really exists and make up your own mind. Don’t troll me or curse me if you end up going through with this on your own free will and it doesn’t play out. There is a risk that Iconomi does not set out to do what they have announced. Only you can decide on the trust level you have in the team and if they will follow through. Binance recently delisted ICN but have not stated why. It could be because eICN will become a security and Binance doesn’t want complications. Or it could be something else.
Can Iconomi really buy back ICN at 0.0019? Well if you look at the market value of Iconomi $35 Million, at current prices that totals about 170,000 Ether. From their published financial reports they have shown that they have roughly this same amount of Ether in their war chest. Which means they could buy up almost all of the circulating supple of ICN. Considering that there will be people taking up the offer for eICN there’s plenty of Ether for them to go through with the purchase.
In the end it comes down to trust. Trust in the Iconomi team that they will do what they publicly announced. If you are weighing up whether to get involved then you have to decide on what the risks are first. What are the chances that I buy ICN now and that Iconomi will buy them back from me at 0.0019? What are the logistics involved in selling back the ICN tokens? Iconomi team has not announced these details yet. This is crypto and things are very risky. Many people have made huge sums of money but even more have lost. Do your own research and good luck.
The Author has participated in the ICO for Iconomi. In the time since the ICO I have traded ICN. I sold some for Bitcoin before Bitcoin went to the Moon. I still also hold ICN. I bought more after they announced this offer. If the price of ICN goes up it will benefit me. I am not trying to SHILL Iconomi but it may come across like I am. You decide. Do your own research.