The Chinese government on Monday banned Initial Coin Offerings – ICO, a new fundraising phenomenon that has taken the Internet by storm. In the official ruling, the People’s Bank of China ruled that these sales violate Chinese law and must stop immediately.

There have been dozens of ICOs this year, with many raising hundreds of millions of dollars. As per the security laws, fundraising on this scale would be strictly regulated by the Securities and Exchange Commission in the China and their counterparts in United States, Europe, and around the world. But as the ICOs are unregulated, China has started to crack down on projects that break Chinese laws in this area.

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These regulatory laws were passed to prevent scammers from defrauding gullible investors. And that is exactly what started to happen with ICOs. Some Initial Coin Offerings are legitimate, but the others are just frauds. And with so many cryptocurrencies being issued, many of the ones that aren’t scams are still likely to fail.

Two days before the People’s Bank of China’s ruling, Bitcoin reached an all-time high of over $5,000. And after the ICO ban, almost all of the top 100 cryptocurrencies went down by more than 10%. At the time of writing this, Bitcoin is still strong but stands at $4,528.79, while the Ethereum stands at $331.