Fear sells: On the sentiment deceptions and fundraising success of initial coin offerings

Retrieving information from an intensive hand-collected whitepaper data library covering 5,033 ICOs launched before 2020, we analyze the determinants of ICO success as measured by the amount of raised funding. We assess the sentiment and readability in ICO whitepapers in addition to other information disclosures. Whereas we do not find any evidence for that the riskiness of ICO projects would lower the predicted amount of raised funding, our results strongly suggest that ICO investors are largely guided by emotions when making investment decisions. Contrary to earlier literature, we find a weak association between quality signals of whitepapers and its success.