It can be argued that Initial Coin Offerings (ICOs) have become popular crowdfunding means not just within the crypto community but in the mainstream world of finance as well. 2017 saw an astronomical increase not only in the number of crypto fundraising platforms but also in the amount of capital that they were able to raise. This invariably led to the brightening of the regulatory spotlight with bans and restrictions becoming commonplace.
Tokenize All the Things!
A significant majority of ICO crowdfunding campaigns have been carried out by startups trying to secure funding for their projects. However, some investors have sought to use the model as a means of funding projects that don’t fit into the conventional crypto/blockchain-related startup enterprise.
This shift stems from the belief that just about any asset can be tokenized and issued on a blockchain. While this idea might have some merit, it appears an attempt to accomplish such an operation has fallen through.
In March 2018, news broke of investors’ plans to buy the iconic Plaza Hotel in New York by means of an ICO. At the time, the story held that the plans were still in their preliminary stages, recent reports indicate that the deal may never happen.
The Proposed Plan
A group of investors called Chimera were interested in purchasing the Plaza Hotel via an ICO. The group planned to issue a token called the “Plaza Token” which would be sold to investors to raise capital that would be used to purchase the hotel from the Sahara Group.
Unlike many ICO tokens, the Plaza Token entitled the investor to a portion of equity in the investment group. The target for the proposed ICO was set at about $375 million.
Following the media buzz on the subject, Kevin O’Leary spoke about the plan during an interview with CNBC in March. There were reports that Shahal Khan, the principal investor of the Chimera Group, was already in talks with Sahara Group towards agreeing on a deal.
Sahara Group has been trying to sell the $500 million property since 2017 with many buyers signifying interest since that time. Sahara had initially bought a controlling stake in the hotel for $570 in the year 2012. The hotel once belonged to U.S President, Donald Trump in the late 80s and early 90s.
However, there have been reports from multiple sources that the deal is not progressing. According to these sources, the project has failed to attract investors, thus repelling other investors from the sale.
These developments have cast the future of the ICO into serious doubt. Part of the initial plan, as reported by Business Insider, was that Chimera would hold a private investment round to raise about $675 million for the hotel.
The ICO would then have been used to pay off the debt from the purchase. Unfortunately, none of these two options appear to be in the works at the moment as the deal seems to have stalled.