The Frankfurt-listed company behind the Bytemine token sale called Stockholm IT Ventures announced on Wednesday that it is launching an asset management service focused on cryptocurrencies.
The news comes amid an increasingly uncertain crypto market and right after the market cap of all digital currencies dropped below $200 billion.
After getting listed in 2014 for about €3 per share, the firm is now trading at close to €0.02 per share. The stock of Stockholm IT Ventures dropped 11 percent in Wednesday’s trade on slim volumes. The value of the company has practically been erased from the market since it was listed in 2014.
The move comes after the firm announced a private and crowd sale of its Bytemine token. The firm successfully raised €5 million during the private pre-sale, which enabled it to announce at the beginning of August that it is reshaping its strategy.
The firm canceled the crowd sale and instead is pivoting to asset management. At the beginning of August, the company asserted that it is starting to use “proven crypto trading strategies” to generate income.
Today we see the launch of Crypto Asset Management Services (CAMS). If you are contemplating an investment, however, you should read some details below.
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Ponzi Scheme Red Flag
In an official press release distributed via PRNewswire, the firm’s CEO Anthony Norman asserts: “CAMS unique algorithm gives us the opportunity to benefit from the extreme volatility in crypto trading. It allows us to guarantee a 1-1.5% return per trading day.”
Apparently, the person heading a company which just got a €5 million commitment is promising guaranteed returns to investors. Such promises have traditionally been viewed as a red flag for Ponzi schemes.
The strategy behind voicing such a strong commitment is not clear. However, the CEO continues: “We are as happy with price increases as we are with decreases in the market. The important thing is that they do not stand still. Percentage fluctuations in equity and FX trading are usually only a percent or so per day while with cryptocurrencies 10% fluctuations are not uncommon.”
According to a metric developed by SIFR Data, a US company focused on cryptocurrency analytics, the trend in crypto volatility is currently lower. As the chart below shows, the volatility index of BTC, ETH, XRP, LTC, DASH and XMR is trending lower since February.
In the words of the CEO of Stockholm IT Ventures, Bytemine is guaranteed to deliver results in a volatile market. The problem is, the crypto market actually has been becoming less and less volatile in recent months.
After the numerous failed ICOs in recent years, the vigilance of investors is close to all-time highs. The statement of Bytemine’s executive management is flagging the company for extra due diligence when dealing with it in any way. Regulatory scrutiny is also very likely to be significant.