The ICO, or initial coin offering, era was notorious. A decade ago, crypto founders raised millions and even billions from small-time traders by selling cryptocurrencies tied to new projects. Many raises, like the one for Ethereum in 2014, were in good faith. Others were outright scams. Regulators cracked down on the practice, and ICOs soon became another chapter in crypto history.
Now, the practice appears to be making a comeback, and the crypto startup Legion hopes to create the go-to platform where companies can — responsibly — sell tokens to small-time traders, say cofounders Fabrizio Giabardo and Matt O’Connor.
“Just think IPO-type rigor, IPO-type access, mixing in with, again, crypto rails,” Giabardo told Fortune.
On Wednesday, the pair announced that Legion had raised $5 million in a seed round led by VanEck and Brevan Howard Digital. The crypto exchange Kraken as well as the venture arms of the crypto exchanges Coinbase and Crypto.com also participated in the raise, among other investors.
Giabardo and O’Connor declined to disclose their startup’s valuation. The round was for equity and token warrants, or promised allocations of a yet-to-be-launched cryptocurrency, they said.
Legion’s capital injection comes as ICOs are back in vogue in crypto. In June, the stablecoin project Plasma raised $500 million in five minutes through a public token sale. In July, Pump.fun, a memecoin factory that’s become one of the most profitable projects in crypto, raised $600 million in 12 minutes. And Cobie, a pseudonymous crypto influencer and investor, has launched his own ICO platform called Sonar.
The return of the ICO follows a regulatory thaw in Washington, D.C. President Donald Trump’s administration has signaled a friendlier approach to crypto than that of former President Joe Biden. Crypto companies, who once were fleeing the U.S. amid a flurry of lawsuits from the Securities and Exchange Commission, are now returning.
And some feel more emboldened to try out ICOs as a means to raise funds. But Giabardo and O’Connor believe their platform will help prevent the outright scams that were common a decade ago — when founders would raise millions off the back of a jargon-filled white paper and then disappear in so-called “rug pulls.”
Both founders are crypto veterans. Giabardo, who had stints as a geologist and then consultant, started exploring crypto in 2020 and eventually began working with the crypto analytics platform Delphi Digital. O’Connor comes from traditional finance, where he worked at the asset manager Bridgewater Associates before he found his way to working on Stacks in 2022, a blockchain built on top of Bitcoin.
The two eventually crossed paths and decided to work together to bring back ICOs. Their platform is built to comply with recently released regulatory framework in the European Union for early token launches, they said. The statutes require projects to release a “white paper” that requires issuers to detail, for example, risks involved with the offering and update their white papers anytime there are material changes to the projects.
The two cofounders have also met with the SEC to discuss what disclosures the agency should require for public sales, said O’Connor.
“Give people honest, truthful, succinct disclosures that they can fully understand, do some kind of checking that validates that, yes, they do truly understand these things,” he added. “And then, it’s up to them to take the risks realistically.”
