DESCRIPTION OF BUSINESS
Tycoon Trading Limited, a company registered in Cyprus, is building a ‘social trading’ platform where retail cryptocurrency investors can follow professional traders. The system operates by imitation: When a professional trader places a trade, then all of his followers’ accounts copy it.
Tycoon isn’t a custodian platform, meaning that neither Tycoon nor the professional traders have custody of users’ funds. Instead, the platform works through API connections to major crypto exchanges. The company’s strategy is to create a platform tailored to professional traders’ needs to attract the best talent, consequently driving adoption from retail investors with many options to follow.
Two out of four of Tycoon’s Founders classify themselves as professional traders. According to them, this makes them capable of recognising the key features that will attract other professional traders onto the platform. Tycoon also employs a total of 16 people, ranging from Marketing and business development to technical positions like CTO and blockchain developers. The downside of this team is that the founding and executive positions are occupied by members with little startup experience.
For example, the CEO’s professional background is limited to trading, which does not require soft skills and business experience. The company plans to issue an ERC20 token called TYC and distribute it to investors in an Initial Coin Offering to raise funds and finance the platform’s development and growth. They plan to sell 60% of their token supply (84,000,000 TYC) with a fundraising target of $6,132,000. Their funds’ allocation will be as follows: 40% to Marketing, 30% to Platform development, 15% to the Legal department, and 15% to cover for unforeseen circumstances and events.
Tycoon is registered in a semi-friendly blockchain jurisdiction, Cyprus, known for its lack of intrusive crypto regulations and a favourable tax climate. Notwithstanding this lack of regulation, Cyprus’ Central Bank has issued several warnings for potential investors, prompting private banks to forbid the opening of bank accounts to companies that deal in any way with cryptocurrencies. Another potential legal risk for Tycoon is its token classification: Tycoon considers TYC as a utility token, with no plans to register it as a security, a known legal uncertainty for token issuers globally. The company has two legal advisors of good reputation, Axel Hellinger and Biyan Mienert.
Tycoon has a strong social media presence and following as a result of a successful bounty campaign. The most notable example of this is their Telegram chat, with 14k members.
Our researchers gave Tycoon a final rating of 63.4%. The breakdown of this rating is available at the end of our report.
PRODUCT & COMPANY DESCRIPTION
Tycoon is developing a cryptocurrency social trading platform. Social trading is a form of investing that allows investors to observe the trading behaviour of other (professional or not) traders, and to follow or copy their strategies. This system is also called ‘mirror trading’. The platform offers professional cryptocurrency traders the possibility and economic incentive of receiving a percentage of followers’ profits. Tycoon was conceptualised in early 2018, to quickly start product development. As stated in page five of their whitepaper, the project was kickstarted with developers’ funds to build a minimum viable product before crowdfunding.
Tycoon’s vision, as listed on their website, is:
‘(…) To create a synergy between inexperienced investors in the field of cryptocurrencies and already experienced, successful traders worldwide.’
- Tycoon focuses on professional traders. On a social trading platform, where retail investors copy professional ones, it is vital to have an adequate number of active professional traders to represent users’ desired variety of styles. According to Tycoon, this is why other similar platforms didn’t succeed –they failed to attract and keep professional traders.
- Differentiated and attractive features –such as profit-sharing, relatively low fees, API integration, a trader ranking system, margin trading– and cost alignment with value.
- Energetic social media presence.
MARKET CONDITIONS AND COMPETITION
Tycoon’s target customers are retail cryptocurrency traders and investors. The market for social crypto trading is expected to increase due to the continued adoption of blockchain and cryptocurrencies. According to reports by various exchanges, there is a surge in trading volume across the whole market, with many new accounts opening during the COVID-19 crisis. India (the world’s 2nd largest population) has also recently overturned a negative regulation, making crypto trading legal again. With hyperinflation destroying the economies of countries such as Argentina and Venezuela, the demand for currency alternatives, like Bitcoin, has also grown.
Global trends like the digitalisation of workplaces, impact of COVID19, lowered trust in global institutions, and the weakened central governments’ ability to deal with crises all seem to be in favour of this project. Blockchain trends like DeFi, Ethereum 2.0, crypto derivatives, Lightning Network, privacy in transactions and crypto-friendly regulations also seem to suggest that crypto trading will increase in volume (current market cap is ~ $200 Billion, as opposed to global equities/Forex trillions). As such, any company that makes crypto trading easier is expected to address a larger and larger market over time.
The most notable competitor to Tycoon is perhaps eToro. This Israeli brokerage firm offers 15 cryptocurrencies on their platform, also promoting social trading functions. The company has raised more than $162 million since 2013, and it reportedly reached 12 million users in 2019. The difference between eToro and Tycoon is that eToro is mainly a Forex and stocks brokerage firm using CFDs instead of directly dealing with assets. Another difference is that all users of eToro trade exclusively on- platform, whereas Tycoon is a trading tool to be connected to other exchanges via APIs. eToro reportedly reached 12 million users in 2019.
Other competitors include Copyme. and Covesting.
How is Tycoon different from its competition?
Tycoon focuses its strategy on creating a product that professional traders will adopt. Therefore, retail traders can identify traders that fit their style and that trade assets that interest them. Competitors, such as Covesting and Copyke are focused on adoption by retail investors, with features to facilitate copying and following, plus educational resources for beginners. Additionally, Tycoon has a proprietary token (TYC) to create incentive structures for their end-users. Investors that pay their fees with TYC get various discounts, depending on the amount of TYC they hold.
TYC, Tycoon’s token, is built using the ERC20 standard on the Ethereum network. ERC20 tokens can interact with other currencies, use smart contracts, be quickly onboarded to centralised exchanges, operate with decentralised exchanges and apps, and rely on Ethereum’s security. You can learn more about the TYC token on Etherscan.
TYC will mainly be used to pay fees, making the ERC20 standard ideal. By the time Tycoon reaches the need for a very high transaction throughput ‘Ethereum 2.0’ should have been launched, meaning that the standard will be able to process more transactions per second (tps). Specifically, Vitalik Buterin, Ethereum’s founder, has said that after this update Etherum is expected to reach 160,000 tps, doubling the estimated capabilities of Visa’s network.
Tycoon has no available minimum viable product yet, but the company has said that its platform is almost ready to launch (as of July 2020). There has been no mention of third-party audits of internal processes/system design, or code reviews of either their website or smart contract. There aren’t many technical details available (such as high system availability, cloud or data centre hosting location, performance, throughput/response, etc.) for investors to evaluate the platform and project. The white paper only covers functional details; therefore, no claims of platform scalability can be substantiated.
The project’s roadmap begins in 2018 when the project was conceptualised, and the team was assembled. Monthly updates have been issued regularly after that. The 2018 roadmap has only five points, with 11 in 2019. The 2020 roadmap has eight points so far, with a vague timeframe divided into quarters and halves.
The roadmap is projected until Q1 2021 and does not expand further into the future. Crypto investors usually consider the need for at least two years of projection, while some projects even expand their roadmaps up to the next four years.
Tycoon’s Roadmap (sourced in July 2020).
General Comments on the Founding Team
Disclaimer: None of our researchers know any of the team members personally. Any conclusive comments below are derived only from information available online.
CEO Serdar Bisi and Hakan Turgut are two young individuals that are self-described as cryptocurrency traders. There is no way to validate the extent of their trading experience since their record is only through self-employment.
It is also unclear if the CEO can manage a company employing 16 people. His only previous experience has been as a self-employed cryptocurrency trader, which does not resemble a CEO’s experience.
COO Semira Keklik recently graduated from her Master’s degree in Business Education. Her inexperience could be a problem for the project as the role itself demands expertise to solve everyday problems and overcome bottlenecks.
CIO Pedro Merkl founded Altruismus E.V., a non-profit organisation in Germany that remains active four years after its founding.
All the 16 team members and their LinkedIn profiles are available through the project’s website (tycoon.io). Tycoon employs five marketing professionals focusing on their ICO, digital, and social media marketing, dedicated to promote the project and acquire users. The company also has two people responsible for technology development, CTO Mario Tunjić & Head of Software Development Stephan Wirth.
Communication with the Team
The team is available through Telegram, although they weren’t very responsive to our researchers. We have found comments in their Bitcointalk thread indicating that they avoided bounty-related questions.
The team’s website shows ten functional social media channels. Still, the most direct means of communication with the team is signalled to be Telegram, currently with 14,455 members. This can mean that contacting a team member might still be difficult for an average user.
The company location on the website shows that it is located in Cyprus, but social media mostly indicates the company to be in Germany.
There is no direct email or phone number shown on the company website to reach the team.
Timo Trippler is the CEO of BlockSmart Europe, his own advisory firm. He is a very active ICO advisor, with over 60 projects listed under his advisory. Although he has not advised any high profile ICOs (as far as we are aware), his experience and connections might help Tycoon raise funds.
Frank D. MBA is the Founder and CEO of ICOboosterteam, a company that provides a range of promotional services to ICOs and STOs. Tycoon is one of their clients.
Daniel Brown is a business development advisor for Tycoon. He has a Mechanical Engineering degree, but is involved with two cryptocurrency ATM machine companies. Tycoon is his first project as an advisor.
Dennis Anselm is listed as an advisor to Tycoon’s corporate network. He is CEO of a company called Smart Space according to his LinkedIn profile, but our researchers were unable to find any information about it.
General Comments on Advisors
Out of six of Tycoon’s advisors, only one of them promoted the project on his social media, specifically on LinkedIn (Timmo Trippler). Three out of six advisors do not disclose on their LinkedIn profiles that they are linked with Tycoon.
The company might receive valuable advice regarding their ICO campaign from their two ICO advisors. Still, it is unclear if they will be valuable to the company after the end of its fundraising campaign. Both of them are involved in a vast number of projects, raising doubts about whether they have the time and interest to contribute in a meaningful way in the future.
Regarding Dennis Anslem, listed as a corporate network advisor on Tycoon’s website, it is not evident by his title how he contributes to the project. Also, the fact that we could not find information about him or his company could signal a red flag.
LEGAL AND COMPLIANCE SPECIFICS
Tycoon Trading Ltd is a registered private company in Cyprus with share capital, having moved jurisdiction from Germany. The limited liability company has only registered Serdar Bisi as both Director and Company Secretary.
Our researchers were able to corroborate the company registration in Cyprus using the following link: https://efiling.drcor.mcit.gov.cy/DrcorPublic/SearchResults.aspx?name=Tycoon+Trading&number=%25&searchtype=optStartMatch&index=1&tname=%25 &sc=1
The Cypriot government is considered blockchain-friendly, and is taking important steps to keep up with international developments. The Cyprus Security and Exchange Commission (CySEC) initiated what they call “Innovation Hub” to start conversations with and give regulatory insight and assistance to businesses developing emerging financial technologies, while assessing and improving the supervisory treatment of such businesses. Additionally, the Council of Ministers’ decision N.85.629, dated 30 August 2018, established an ad hoc working group aiming to develop and implement blockchain technology in Cyprus.
Perhaps paradoxically, Cyprus is not very friendly to cryptocurrencies. Both the Central Bank of Cyprus and CySEC issued warnings to potential cryptocurrency investors and investment firms looking to be involved with them. As a result, Cypriot private banks restrict the movement of funds to and from cryptocurrency exchanges, making it difficult for Cypriot citizens to buy or sell cryptocurrencies.
As previously mentioned, one of the legal risks identified is the fact that the Cypriot financial establishment (Central Bank and private banks) is hostile to cryptocurrencies.
Another identified legal risk is the one that is always present with utility tokens. Claiming to issue a utility token means that the company is exposed to the threat of its country’s securities commission later identifying the token as an unregistered security, therefore deeming the fundraise illegal.
Axel Hellinger and Biyan Mienert are Tycoon’s legal advisors. Their credentials are solid and relevant as described below. The whitepaper indicates that Tycoon will spend 15% of the funds raised on legal necessities –indicating that the company takes its legal aspects seriously.
Axel Hellinger is a German Lawyer and chartered tax advisor focusing on ICOs, startups, cryptocurrencies, Bitcoin, and blockchain. He has one German publication, 11 endorsements in startups, seven in Corporate Tax, and seven in Tax Law listed on his LinkedIn profile. Axel received his legal degree from the University of Bonn (1998-2002) and has worked as a lawyer for more than 14 years in fields such as fiscal offences, company law, ODR (Online Dispute Resolution) and cryptocurrencies.
Biyan Mienert is a PhD Candidate in Blockchain/Doctoral researcher for Law and Regulation of Digitalization and Business Law at the Philipps University Marburg Institute for Law. He is a lawyer specialised in blockchain and Fintech. According to his LinkedIn profile, he has less than a year of experience practising law.
Partnerships and Legal Agreements
There have been no formal agreements, deals or partnerships publicly announced between Tycoon and third parties.
KYC & AML
The project’s whitepaper states that users will have to pass KYC at the token distribution stage, meaning that investors can make purchases without going through KYC formalities. A preliminary test of the token sale process confirms this.
Per Tycoon’s data privacy statement, anyone can use the platform’s DEMO mode without KYC verification. Traders have usernames; therefore, there is no personal information shared between traders and followers.
The token will be used to pay fees on the platform. In his/her first year, a user will receive a 25% discount on fees when paying through the Tycoon Token. Based on this, the team classifies the token as a utility token. There are no public plans exploring listing the token as a security.
The Tycoon token (TYC) issuance is limited to a maximum supply of 140 million tokens. Seed investment/ private sale price is pegged at $0.07 per token with a minimum purchase amount of $1000. The public or crowd sale price has been put at $0.10 per token, which makes the price difference between public and private sales reasonable as seed investors usually purchase larger quantities and incur higher risks.
The initial circulating supply starts with 60% of the total ( 84,000,000 TYC) supply, issued through an ICO. After the ICO the circulating amount will be changing as more tokens are released according to the vesting plan.
Team and Advisor-destined tokens will be periodically made available within 15 months of exchange listing. After listing, 20% of them will become available every three months.
Based on the token allocation, the ICO price per token, and the private sale price per token, we can calculate that the funding target of Tycoon is of $6,132,000. This amount seems within standards for the development this kind of project. Before, we have seen companies trying to raise 15-20 million USD for similar-complexity projects.
On the platform, the Tycoon Token serves as a payment currency, just as BTC and ETH. When you use the Tycoon Token, you will receive discounts on fees and profits shares, similar to BNB on Binance.
Tycoon has implemented a minting functionality into the smart contract of TYC. This functionality ensures that the 69 million TYC tokens to be issued after ICO will be created progressively according to the platform’s demand. In a Medium article, Tycoon stated that unused tokens won’t be counted in the overall token supply. This is intended to lower token supply, leading to higher value.
Unused tokens can be minted again so that the supply remains sustainable, with tokens ‘continuing to provide value to the entire ecosystem.’
SOCIAL MEDIA AND VIRALITY
Tycoon has 6,691 followers on Twitter and tweets once every 5-7 days.
The company has 8.2k followers on Facebook and makes a post, on average, once a week. The majority of this content was posted at the beginning of 2020.
Tycoon is most active on Telegram where it counts 14,218 members, of which 200-300 are online at any point of time. The team is actively engaged in this platform, but the majority of the messages in the chat come from bounty hunters and could be considered of low value, as they are limited to meaningless messages like ‘Hi’, ‘Good project’ and rocket emojis. This could be indicative of the company giving instructions to bounty hunters to constantly comment on the Telegram chat as to make it seem artificially active.
Tycoon’s Youtube channel counts 6.08k subscribers and 5 video uploads.
Other channels have posted reviews about Tycoon, including:
- ICO Review Channel – Created a six minutes video about Tycoon’s project and ICO. The channel is relatively popular with over 7k subscribers .The Tycoon video, created two years ago, currently has about 5k views.
- Crypto Hype Channel – This channel with about 2k subscribers also did a 6-minutes review of the Tycoon token sale about seven months ago. The video currently has over 1.2k views.
- Coinfolio Channel – Another six-minute video commentary on the project, six months ago, The video now has 271 views, and the channel has 1.5k subscribers.
Tycoon has received reviews on a number of websites dedicated to compiling ICO evaluations. The most notable are:
- ICOMarks – 9.0/10
- ICOLink – 4.56/5
- ICO Bench – 4.5
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