What is an IEO in crypto?

An IEO, short for initial exchange offering, is a token sale hosted by a crypto trading platform rather than by the project itself. Buyers use their exchange account to take part, and the tokens can usually trade on that platform once the sale ends. The idea grew out of the problems with self-run ICOs, where buyers sent money straight to a project's address.

What does IEO mean in crypto?

The SEC's investor alert describes IEOs as offerings of coins or tokens to raise money, much like ICOs, but run directly by an online trading platform for the issuer, usually for a fee, so the tokens can trade right away. In practice the exchange picks the projects, sets up the sale page, checks who may take part and handles distribution.

Because the exchange already knows its customers through identity checks, buyers do not need a separate wallet or sign-up with the project. That convenience is a big reason the format spread.

What is the difference between an ICO and an IEO?

In an ICO, the project runs its own sale and accepts funds directly. In an IEO, an exchange sits in the middle and puts its name on the sale. Supporters say this adds a layer of screening, since the exchange reviews applicants. Binance Academy says Binance handles due diligence, technical setup and distribution for projects on its Launchpad, and that not every applicant is accepted.

The model drew wide attention in January 2019. The Block reported that BitTorrent's token sale on Binance Launchpad raised $7.2 million in under 20 minutes, paid in BNB and TRX, despite technical problems that stopped many users from joining.

What are ICO, IDO and IEO?

They are three ways to run a first token sale:

• ICO: the project sells tokens itself.
• IEO: a centralized exchange runs the sale for the project.
• IDO: the sale runs on a decentralized exchange or a launchpad built on one, using smart contracts and a self-custody wallet.

Our guide to crypto launchpads explains how IDO and exchange launch platforms allocate tokens. A crypto presale is a looser, often riskier, version that may have no platform at all.

Are initial exchange offerings regulated?

In January 2020 the SEC's investor education office issued an alert on IEOs. It said platforms hosting them are typically not registered with the SEC, even if they call themselves exchanges, and that an IEO may involve securities that must be registered or exempt. It also stated that there is no such thing as an SEC-approved IEO, and listed red flags such as promised high returns, claims of SEC approval and assurances that the platform has vetted the deal.

Whether a token counts as a security is covered in is crypto a security. Many exchanges also limit sales by country, and US users are often excluded.

Securities rules differ by country and change often. Check the regulator or a qualified professional for your own situation.