Here is why IPOs for new coins may just be a genius scam that allow the devs to silently rake in tons of BTC.
The scam is set up by the dev who is launching a new coin. Before the launch of the coin, there is an IPO phase where a certain number of premined coins are designated to be proportionately distributed to investors depending on the amount of BTC they invest. The dev sets up an address where any user can send in BTC and upon launch of the new coin, they will receive a share of the premined coins.
Now, the dev already wins in this situation as they collect all of the BTC that is invested in the new coin that they created. Hundreds of BTC are gained this way by the dev as we can see from even very recent IPOs such as Viacoin (
http://presale.viacoin.org/list.html) with over 600 BTC invested (at the moment equal to $360,000+ USD).
But the real scam part is revealed when you realize that there is nothing stopping the dev from sending his own BTC to the IPO address. Since the dev is the one who controls the IPO address, they are actually just sending themselves BTC. So without losing any money, they will now gain a percentage of the IPO coins for the new coin. Once the launch of the new coin happens, the dev collects their new IPO coins, which they got for free. Now they can proceed to dump the coins on an exchange for BTC.
Furthermore, the dev can also invite his close friends to send BTC to the IPO address (which the dev will of course return to them) so that they can also get in on the scam.
Taking a look at the Viacoin investors list here:
http://presale.viacoin.org/list.html what if half of those investors are actually the dev sending himself BTC? That means the dev is going to receive half of the coins released in the IPO, coins which he got for free, and can now dump them on the exchange for BTC. The price of the new coin goes into freefall and all of the legitimate IPO investors watch the majority of their investment melt away.
It's genius really and it could even be happening right now...