Arca CIO Slams Lack of Transparency in Digital Asset Offerings

Jeff Dorman, Chief Investment Officer at Arca, has distributed a statement criticizing the lack of transparency in digital asset offerings. Arca is a digital asset firm that offers institutional-grade financial services in the digital asset sector.

In January, Dorman predicted that more attention would be placed on transparency in token offerings. At that time, he said:

“Gone are the days of 2017 when a company issued tokens with a flimsy whitepaper, and could then go dark for years while they supposedly build a working product.  Today’s most valuable companies and projects are being more transparent than ever, and others will follow suit as the market rewards this transparency with token price gains.”

This week, commenting on governance and investor protection, Dorman says he missed the mark:

“We are still underwhelmed by transparency initiatives taken by issuing companies.  Most companies/projects still don’t understand, or care, about transparency, which is perpetuated further by venture capital firms who use the lack of transparency to their advantage by quickly buying tokens at undisclosed discounts in order to dump them on unsuspecting retail investors who lack the same information. There have been a few positive steps towards transparency though. This look behind the curtain makes it incredibly easy for token investors to track the progress of their favorite investments. Providing transparency allows investors to participate in this rerating, and token issuers are rewarded for it. However, governance has largely been a failure to date, either because there isn’t anything worth voting on, or because truly democratic voting processes are blocked by highly concentrated ownership and voting powers. We also continue to see many companies intentionally hiding their financials, including privately-held centralized companies like Celsius and BlockFi.  Regardless, our research team believes transparency initiatives are necessary, but our prediction was certainly too early.”

The comment came alongside Dorman’s mid-year review of predictions for digital assets in 2021. Dorman believes that “thematic investing will once again be a major driver of 2021 investment gains.” Perhaps, minus a lot of transparency…

 

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