If you can get past the company name, which is probably the greatest affront to the written word since Altaba, Cobinhood has a worthwhile pitch. It's a “zero trading fee cryptocurrency exchange platform for the blockchain era” that aims “to shape future economies through cryptocurrency.” It self-consciously models itself another company we all know and love, whose mythological forebear symbolizes a moral revolt against the entrenched interests of the moneyed elite. If that weren't enticing enough, Cobinhood also paid Jamie Foxx to rep their IPO.
Despite promising to democratise investor participation, the non-standardised sales often offer heavy discounts to insiders and celebrities. In Cobinhood’s case, some investors who bought Cobinhood’s “COB” token in its presale got a 100 per cent bonus — two tokens for the price of one. They were then permitted to sell their discounted tokens on the open market, possibly at profit, before outsiders could buy them through official channels.
ICO investors are calling out Cobinhood in community forums and on social media for enabling its partner, cryptocurrency investor Ian Balina, to offer a 150% bonus to his followers. This was while only a 20% bonus was offered to everybody else (it has since already dropped to 10%).
Here was Balina's entire message to loyal followers:
“I have invested in Cobinhood and have become a strategic partner. I will be traveling to Taiwan to meet the team and do a live stream AMA with them. They are not paying me, if anything I am paying them by participating in their ICO.
As strategic partner I am entitled to a generous terms for token purchase. These are normally reserved for Patreon members, but since we have room to spare, I am opening this up to my entire ICO Telegram.
I can do this now, because we’ve created a smart contract to automate everything. So we can now scale and have more people involved.
I still believe in helping out the little guys, and I am doing that with this. Below are the terms. Please don’t share outside the group otherwise people who invest outside the group will likely lose their money.”
Cobinhood's 26-year-old CEO has now apologized for the little breach of etiquette, calling it a “mistake” that was “unfair” for ordinary ICO investors. Balina had his own take on the imbroglio:
Mr Balina said Cobinhood had allowed him to share the deal with a select group but added that the terms “were leaked out to people outside the syndicate.”
So it wasn't his or their fault, really.
Here we can see the entire paradox of the crypto space, all in one tidy little package. A startup aiming to level the playing field in a space that exists in large part as a protest against the corrupted financial establishment ends up extending preferential terms to connected insiders in a self-described “syndicate” because, hey, why the fuck not. This is crypto, baby. There are (almost) no rules!
Cobinhood raised nearly $10 million in its ICO.