A New ICO Wants to Get That Wu-Tang Album Out of Martin Shkreli’s Hands

September 25, 2017, 9:46 PM UTC

A new Initial Coin Offering has put a cherry on top of the most frothy market of 2017. The organizers of Wu-Tang Coin, whose launch today was first spotted by Bloomberg, are proposing to raise $3 million to $4 million worth of cryptocurrency to buy the infamous Wu-Tang Clan album Once Upon a Time in Shaolin from disgraced pharmaceutical entrepreneur/convicted securities fraudster Martin Shkreli, and make it publicly available.

It’s a noble idea. It’s also emblematic of how out of control the ICO market is.

If all this doesn’t make a lot of sense, a quick refresher. Initial Coin Offerings have been around for a few years, and they’re essentially unregulated stock sales that use cryptocurrency like Bitcoin for crowdfunding. This year, ICOs blew up, and have channeled more money into blockchain startups than traditional venture capital. But because they’re unregulated and sometimes anonymous, they’re also highly risky.

Once Upon a Time in Shaolin is, like cryptocurrency, an item whose value was very carefully engineered. There is only one, ornately packaged copy of the album. It was purchased by Shkreli for $2 million in 2015 – just months after he became a global villain by jacking up the price of a life-saving drug by 5,000%.

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Shkreli subsequently embraced his status as a pariah, including by trolling the Wu-Tang Clan themselves and, more recently, threatening Hillary Clinton’s safety. Prospective jurors screened for his securities trial described Shkreli as “a greedy little man,” a “snake,” and “the face of corporate greed in America” – making him, as another prospective juror pointed out, fundamentally unworthy of owning the only copy of an album from arguably the most important group in the history of hip hop.

So crowdfunding an effort to get the album into the hands of the public seems positive. But using an ICO to do it is potentially misleading.

The core premise of most ICOs is that the cryptocurrency you’re buying will fuel some sort of blockchain-based system, giving the tokens inherent value. Tokens sold by startups like Storj and Gnosis, for instance, will be useful for buying blockchain services.

But Wu-Tang Coin (Trading symbol: CREAM, of course) has no fundamental relationship to the blockchain. The CREAM white paper (every ICO has one, it seems) has next to nothing to say about technology. According to its organizers, Wu-Tang Coin is an attempt to raise “donations” for a cause. That could also be accomplished through a Kickstarter campaign, but, they say, using an ICO lends more transparency and makes refunds easier.

But there are other ICOs that purport to be investments, while having just as little real relationship to blockchain tech. Without naming names, there are ICOs backed by flimsy promises to magically blockchain-ize everything from marijuana to sand, but linking crypto to real-world assets is still little more than an idea. Other ICOs are outright scams. And many ICOs – good and bad – are being aggressively marketed on social media, flouting SEC regulations and putting unsophisticated investors at risk.

So, contribute to Wu-Tang Coin if you’d really like to hear Once Upon a Time in Shaolin. It just might happen. But don’t confuse it with an investment – and be just as cautious with other ICOs.

Update September 16, 2017: This article has been updated to reflect clarifying statements from the organizers of Wu-Tang Coin.

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