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Hedge Funds Flip ICOs, Leaving Other Investors Holding the Bag

  • Early token investors often get preferential discounts, terms
  • SEC chairman warns of ‘pump-and-dump schemes’ in offerings
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Bitcoin Is Like Airline Miles, Says JPM's John Normand

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Instead of speculating on bitcoin, the smart money has figured out that one of the surest ways to get rich quickly with cryptocurrencies is to be in early on initial coin offerings.

Hedge funds are proving to be first among equals when it comes to digital token sales by technology startups, receiving preferential discounts and terms and then often cashing out. While legal, the maneuver is drawing comparisons to some of the eyebrow-raising practices that took place during the IPO heyday of the 1990s, when many preferred investors would quickly resell shares for big profits.