An initial coin offering raises money by selling tokens before a project launches. The model exploded in 2017. Startups published a white paper, promised a new protocol, and sold tokens for ETH or BTC. Some delivered working products. Many did not. The SEC later ruled that most ICO tokens were unregistered securities, and the party ended.

ICOs solved a real problem. Early-stage crypto projects had no venture capital network and no public market. An ICO let anyone buy in, anywhere, with no accreditation requirements. That openness attracted scammers alongside builders. The 2017 boom raised billions, and a large share of those projects went silent within a year. Regulators cracked down. The SEC brought cases against Telegram, Kik, and others. The legal landscape shifted toward SAFTs, private sales, and airdrops. ICOs still happen in friendlier jurisdictions, but they are a shadow of their former scale.

ICOs versus other fundraising

• ICO — public token sale, often unregistered, high risk
• IEO — exchange-hosted sale with some vetting
• IDO — decentralized exchange launch, permissionless
• VC round — private investment, equity or tokens with vesting

The structure matters less than the project. A token sale with a clear product and locked team tokens is a better sign than a flashy website and a countdown clock.