[SNT] Status ICO investors beware

Status ICO will begin in just a few hours (http://contribute.status.im/).
A significant amount of hype has been building around this ICO, as many came to be aware of the ICO from through ad on Blockfolio. I myself became interested in the project, so I decided to do some due-diligence.

According to the co-founder Jarrad Hope (https://blog.status.im/distribution-dynamic-ceilings-e2f427f5cca), the Status ICO will employ an ICO model called "Dynamic ceiling."

Distribution & Dynamic Ceilings - JARRAÐ HOPΞ (Co Founder of Status.im)
(https://blog.status.im/distribution-dynamic-ceilings-e2f427f5cca)

This is a basic illustration of how the model works. There is an initial cap. After reaching the target, the smart contract deploys additional hidden ceilings, which, in theory, should deter whales from throwing large sums of ether since the cap amount is not known and there is a possibility of the ether being rejected due to being too large. Or, at least, that's what it's supposed to achieve. Upon digging deeper, however, I discovered that there's a catch. More on that below.

On the Status ICO terms (https://contribute.status.im/status-terms.pdf), one is able to see find details such as the initial cap amount and the hard cap amount, which were not shown on their crowdsale website (http://contribute.status.im/).

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▪ Initial Ceiling: The Initial Ceiling will be activated automatically after total Contributions of 30,000 ETH have been recorded by the Smart Contract System. In case (pending or transacted) Contributions exceed the Initial Ceiling, the exceeding Contributions will not be accepted as Contributions, but will be automatically transferred back to the address they have been sent from (in total, not just the exceeding part). After the Initial Ceiling has been reached, the first Hidden Ceiling will be communicated automatically by the Smart Contract System.

▪ First and subsequent Hidden Ceilings: The Hidden Ceilings will be activated automatically after total Contributions in the amount of the respective Hidden Ceiling as implemented in the Smart Contract System have been recorded by the Smart
Contract System. Contributions (pending or transacted) exceeding the respective Hidden Ceiling will not be accepted as Contributions but will be automatically transferred back to the address they have been sent from (in total, not just the
exceeding part). Before the Initial Ceiling has been reached, the amount of the subsequent Hidden Ceilings will be communicated automatically by the Smart Contract System.

▪ Hard Ceiling / Maximal Contribution Amount: The Hard Ceiling will be activated automatically after total Contributions in the amount of 300,000 ETH have been recorded by the Smart Contract System. Contributions (pending or transacted)
exceeding the respective Hard Ceiling, will not be accepted as Contributions (in total, not just the exceeding part). Once the Hard Ceiling has been reached, the Contribution Period ends.

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To summarize, there is an initial soft cap of 30,000 ETH (~10,800,000 USD). After meeting this target, there will be a series of hidden caps. And, most importantly, there is a hard cap (the maximal contribution amount) of whopping 300,000 ETH (~108,000,000 USD). This is the true amount Status ICO intends to raise - a staggering sum of 108 million USD.

To put this into perspective, Bancor was heavily criticized for having raised 153 million USD with their obscure ICO model in which the hard cap was hidden. Basic Attention Token, during its ICO, raised 35 million USD, and currently sits at 186 million USD. If successful, Status ICO will be the second biggest ICO in the history of all ICOs. Given the current ICO climate, I believe this target will be met within the 7 day ICO window. The fact that the hard cap exceeds 100 million USD appears to be almost entirely unknown to potential investors, as the ether amounts of the soft cap and the hard cap are NOT shown on their crowdsale website. A few of the ICO analysis papers I came across have also missed this crucial fact, only mentioning the initial cap of 30,000 or sub 12-million USD in their analysis, misleading the potential investors to thinking that the ICO guarantees a high ROI.

Do I believe that it was the Status project team's intention to deliberately mislead the potential investors? I cannot say with 100% certainty, but let's go back to the figure above that I grabbed from the co-founder's blog. In this figure, the difference between the initial soft cap and the hard cap (unknown) is less than 100% of the initial soft cap. This is NOT a graphically accurate description of their ICO model, as, according to their ICO terms, the hidden hard cap is 10 times the initial soft cap. A more accurate graphical representation would be a curve that begins very low and ends extremely high.

So why do I think the Status team decided to employ such an ICO model? It's simple. Greed. Bancor was able to raise 153 million USD, and it would have appeared to the team that it was possible to raise over 100 million USDs through an ICO. The contrast between the effort by the team to explain their dynamic ceiling ICO model and the effort (or lack thereof) to explain the single most important ICO metric - maximum contribution amount, raises doubts about their true intention with the new ICO model. Moreover, to not be clear about the actual ETH or USD amount of money they intend to raise and putting those only in their ICO term paper that not many would bother to read, makes me question how transparent they intend to be about their project progress in the coming months and years. Also, starting at over 100 million USD right after ICO would prove to be disastrous to investors should Eth rises in value faster.