Are ICO's a legitimate way to raise capital?

I think the biggest risk, like in so many things, comes from not having the right team and knowledge in place to do it right. Folks who do this particular thing for a living and have for some time are critical to getting this right. We work with a team from Australia that runs a VC firm and has done ICOs for several years now, including getting past all the related hurdles. It's a very specific set of knowledge and not well suited for first timers at this time.

The biggest risk for any initial coing offering (ICO) or initial token offering (ITO) is not using the proper regulatory mechanism to raise money. Regulation D 506(b) and (c), Regulation A+, and Regulation S are all being utilized to legally raise capital through an ICO/ITO. Now, this may change as the SEC and other federal regulatory bodies make decisions and cases are litigated (Ethereum and Ripple, etc.) but right now, with the information we have, these are the tools people in this industry use.

This post is provided for general informational purposes only and is not intended to be legal advice specific to you. This general information is not a substitute for the advice of an attorney in your jurisdiction. The attorney client relationship is not established by this post.

What type of entertainment?

They are. But they are not the ideal way to invest.

You invest in something when you know how the company is performing and how the management is.

In case of ICOs, people invest before there's any product. It's nothing like IPO but everything like a Kickstarter project. Atleast in Kickstart project you have lesser amount to loose whereas in case of ICO, you may end up loosing a lot.

Only people who make money in ICOs is the company doing ICOs.

I have been involved as a developer in few of them and I advice everyone to stay away from Crypto or atleast ICOs.