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Almost a third of all cryptocurrencies that were financed through online fundraisers last year have lost “substantially all value,” while the vast majority are trading below their listing price, according to an Ernst & Young report published on Friday.

The professional services firm analyzed more than 141 projects that raised money in 2017 through initial coin offerings (ICOs), in which new virtual currencies are issued to buyers. It found that 86 per cent of coins have fallen below their initial price on online exchanges.

Companies typically raise money through ICOs to build new technology platforms or to fund businesses that use cryptocurrencies and blockchain, the software that underpins them.

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EY analyzed 86 projects that raised in 2017 and found 71 per cent still have no working product or offering in the market. The percentage is significantly higher than what could be expected with traditional venture-backed software startups, EY said.

“This looks worse than we thought,” Paul Brody, global innovation leader for blockchain technology at EY, said in an interview.

The EY report comes following a cryptocurrency investing frenzy, during which startups raised hundreds of millions of dollars online, with often little more than a business idea and a handful of employees. The 2017 ICO boom paralleled a spike in the price of bitcoin, which peaked in December at almost $20,000.

Since then, the market has fallen by more than 70 per cent. Despite the crash, large financial institutions, including Fidelity Investments and Goldman Sachs Group Inc, are launching products or backing companies in the space.

Most tokens issued by ICO companies were supposed to be utilized as means of payment on the websites or networks they were building.

Yet of the companies that did build a working product, seven also started accepting payments in traditional fiat currency, a move that reduces the value of the tokens to investors, EY found.

Some have altogether stopped accepting their own token, EY said.

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The quality of ICO companies is “much much worse” than the first internet startups of the late-1990s - such as short-lived pet supplies seller Pets.com - whose stocks experienced a dramatic boom and bust, Brody said

“At least from Pets.com you could get pets food,” Brody said. “They had an actual working business, they had a product.”

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