What Is an IEO and Why Are Crypto Exchanges Rushing to Launch These New Token Sales?

Here’s how Binance, Bittrex and the other exchanges plan to move forward with Initial Exchange Offerings

By Alissa Fleck


Initial Exchange Offerings, or IEOs, are an emerging fundraising trend in the crypto space that offer several few key differences from their ICO and STO counterparts.

For starters, IEOs fundamentally involve a central third party — an exchange, hence the name — that invites buyers to register an account, purchase its native token and, most of the time, use this native token during the sale. While the exchange is not legally liable for any claims made by the token sellers, it’s generally accepted that the exchange takes responsibility for vetting the sale and conducting KYC. In some cases, the exchange also handles marketing for the sale.

But don’t expect IEOs to solve the problems inherent in ICOs. Token sale transparency, for example, is still lacking for investors trying to research IEOs. Even when it’s hosted by a major exchange like Binance or Bittrex, the precise inner workings of an IEO can be frustratingly opaque. In some cases, exchanges have done little more than issue a press release or publish a blog post to announce a new sale.

Understandably, this has prompted many in the crypto community to suspect these sales of being offered to insiders first, effectively shutting out the general public.

Whatever the future holds of IEOs, we can expect them to gain ground in the coming months. To help investors make sense of these new sales, we’ve compiled this roundup of the major exchanges and their plans to move forward with IEOs.  

Binance

Binance, the largest exchange by trading volume, is leading the way with its Launchpad, having already backed three successful IEOs in 2019. The exchange has also committed to launching at least one monthly token sale for the rest of the year. Critics worry that Binance’s business strategy is unsustainable, but so far they’ve been out-voiced: Launchpad’s three IEOs to date raised a combined $17 million. As ICO Ranker previously reported, Binance has repeatedly relocated its headquarters in an apparent effort to skirt government sanctions. Whether or not IEOs will provide a safe harbor from regulation remains to be seen.

Bitmax

Bitmax recently announced its own launchpad and initiated its first IEO in March. Despite prior controversy over the private sale of Bitmax’s BTMX token, traders are showing increased interest in the exchange’s native token. Still, they appear underwhelmed by the exchange’s first IEO —  the decentralized oracle service network token DOS — with critics projecting it will lose value once listed.

Bittrex

Bittrex’s foray into IEOs was initially met with excitement, though the exchange’s first planned IEO — for the RAID token — was scrapped unexpectedly due to “significant last minute changes” by the company. Bittrex has publicly spun the unfortunate event as evidence that the exchange is committed to protecting investors and maintaining market integrity at any cost.

KuCoin

KuCoin’s Spotlight is backing blockchain platform Multivac in its first IEO, due to launch April 3. In what appears to be an encouraging sign, the exchange’s native KCS token has appreciated in value since the unveiling of its IEO platform.

Huobi

In an effort to keep pace with competitors, Singapore-based Huobi has also announced a new platform, Huobi Prime. Prime differs from the other exchanges’ IEO launchpads though — it will serve as a “selective token listing channel” based on the Huobi HT token, according to the company, rather than a crowdfunding or IEO platform.

OKEx

OKEx unveiled its own IEO platform, dubbed OK Jumpstart, though details on a planned launch are sparse at this point. However, company executives have echoed the general sentiment among the exchanges that 2019 will be “the year of the IEO.”

EXMO

EXMO has planned its first IEO for Paytomat (PTI), an infrastructure platform, with a start date of April 1.  

ExMarkets

ExMarkets is one of the exchanges that advertised its IEO launchpad in a one-off blog post, which hasn’t exactly inspired confidence. The company announced plans to team up with existing app Airsave Travel for the project’s offering on May 1, and it appears that several IEOs are ongoing as of this publication date

It remains to be seen how IEOs will affect the crypto landscape, and if 2019 will indeed be the year of the IEO. This is crypto: Regulatory issues will never go away, and the industry will find itself fixing problems in its typical baptism-by-fire fashion.


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