It seems everyday there is a new report about bitcoin and the amount of value it continues to generate on the market. The tremendous amount of wealth being driven into initial coin offerings, or ICOs, is creating a new generation of barons similar to the financial influence exerted by John D. Rockefeller, Andrew Carnegie, and Cornelius Vanderbilt in the early 20th century.

Panelists Alan Cohn, of counsel to Steptoe & Johnson; Kathryn Haun, a lecturer at Stanford University and a member of the board of directors of Coinbase; and Jonathan Levin, co-founder of Chainalysis, discussed pitfalls of ICOs and gave some examples of how legal problems have arisen from them at “Cyberspace Barons: Creators of ICOs and Ransomware,” at SXSW in Austin.

Investors looking to get in on the burgeoning cryptocurrency market are putting big money into these offerings. For example, Tezos raised $232 million in a matter of weeks during its ICO. There is also a rumored Telegram ICO on the horizon with a $1 billion funding goal.

More and more cryptocurrency exchanges are on the market, but they don’t have much staying power, Levin said. “The survival rate for an exchange that was born in 2010 or 2011 was something like 15 percent over a one-year or two-year horizon.” Levin said there were multiple reasons for why exchanges failed including being hacked, being unable to execute a business plan, or simply not having enough demand for the currency.

In addition to the high rate of failure, the enormous amount of money being generated has led to scammers and other legal issues. A recent Russian ICO raised $1 million from the public market even though its “team page” was comprised of Google images and actor Ryan Gosling was listed as one of the company’s “officers,” as Levin showed in a slide at the presentation.

BTC-e was a prominent and popular cryptocurrency exchange since its founding in 2011, but legal troubles arose when Alexander Vinnik, who allegedly operated BTC-e (BTC-e claims it never employed Vinnik), was arrested on accusations of laundering $4 billion worth of bitcoin through the exchange, Levin said.

Included in the alleged laundering was an accusation of theft from Mt. Gox, another cryptocurrency exchange, Haun said. There was some evidence of about 450,000 bitcoins being stolen from Mt. Gox and ending up with Vinnik, Haun said.

Initial interest in BTC-e came about for another reason though. “The government became interested in BTC-e because analysis showed that about 95 percent of ransomware schemes were cashing out or liquidating their bitcoin through BTC-e,” Haun said.

Outside of criminal actions, class action lawsuits are now also becoming a part of ICOs.

Kathleen and Andrew Breitman started Tezos Blockchain in 2014 in hopes of updating the bitcoin blockchain that was created in 2008. The Breitmans envisioned Tezos as a new digital commonwealth, Cohn said.

The company was to be governed by the Tezos Foundation, based in Switzerland, and management of the business was to be done by Dynamic Ledger Solutions, based in the U.S.

Tezos generated $232 million in a relatively short period of time with the sale of 600 million Tezis. The large amount of money generated attracted the attention of class action attorneys, Cohn said.

Cohn said there were numerous reasons why class action lawyers focused on Tezos, including failing to deliver their technology on time, which led to functionality problems. Also, a fight broke out between the head of the Tezos Foundation and the Breitmans about how the governance of the currency would be managed, Cohn said.

This has led to class action lawsuits against Tezos. “There have been a number of class actions filed against Tezos alleging everything from the unregistered sale of securities to fraud … material misrepresentation, unfair competition, and false advertising,” Cohn said. One of the main reasons is that “the token was described not as a token, but as a nonrefundable donation at least as far as is alleged in the various class action complaints—not as a token sale, but as a nonrefundable donation to a foundation.”

Cohn said the transaction was described in the same way as a supporter donating money to a charity and receiving a tote as a gift in return.