Civic, the developer of a digital identity platform for online transactions, is aiming to raise $33 million in an ICO beginning Thursday, to build out its network.
Vinny Lingham, Civic's co-founder and CEO, said the company is playing it straight and hired law firm Perkins Coie to try and stay out of the legal gray area.
"These tokens are tokens you need to use to function within our platform," said Lingham, who started the company last year. Unlike the case with an IPO, Civic is booking the proceeds from the ICO (or token sale) as revenue, since it's selling a product that customers can eventually use.
Investors in the ICO will pay with bitcoins or ether -- two popular types of cryptocurrency -- in exchange for Civic's tokens. Banks, travel companies and hotels can use the tokens as currency when clearing transactions, and customers can acquire more tokens by inviting friends.
Stan Miroshnik started the Argon Group in 2016 as an investment bank focused on digital currencies. He's advising on the Civic offering and has plenty more in the pipeline, with an ICO scheduled about every three weeks.
But Miroshnik said there's clearly excess in the market now, with companies that have no functional business and no real relation to blockchain looking to ICOs for a quick buck.
"We are very cautious," said Miroshnik. "This is something that should be coming from the community and projects related to blockchain."
Prior to Civic, Miroshnik's biggest deal was last week, when Storj Labs initiated a $30 million token sale. Storj is a cloud storage company that uses the available capacity on lots of individual computers to store and secure data. Imagine Amazon Web Services, but instead of owning massive data centers full of servers, Storj pays individuals to let others rent space on their machines.