Peter Sussman was running on three hours sleep when he lost $20,000 to a fraudster working on the edges of the “initial coin offering” market — a new way companies are raising money by selling investors digital tokens in exchange for virtual currency such as bitcoin. The 27-year-old software developer from Illinois had been awake all night researching the ICO for a yet-to-be-launched product called TokenCard, which offered buyers of limited “TKN” tokens the opportunity to support “the first debit card powered by smart contracts”. Worried he would miss out on the sale as he waited for the ICO website to load, Mr Sussman was fooled by a scammer posing as a TokenCard representative in an online messaging forum. Thirty seconds later, he realised he had sent his funds to the wrong address and lost the equivalent of almost half his annual salary. Scams like this have become common as retail investors have piled into the growing ICO market. At the same time, regulators have started to take note: China announced on Monday it was banning them, and called a halt to fundraising involving virtual coins. TokenCard was one of 60 ICOs in the second quarter of 2017, according to research company Smith + Crown. In that time, ICOs raised the equivalent of $863,173,000 — nearly five times more than had been raised since they were invented in 2013. Though these valuations are based on the value of the virtual currency that companies acquire in the process. The largest ICO this year was Tezos, which in July raised $232m of the digital currencies bitcoin and Ether. The aim was to fund the development of a new kind of “blockchain” — a shared database of transactions best known for its use in bitcoin. Although ICOs have been around for several years, Marshall Swatt, co-founder of digital currency exchange Coinsetter, said the huge increase in the value of digital currencies had brought new interest from “investors, traders, the media, and average individuals”, including people who want to invest their now valuable digital assets in other virtual projects. In 2013, bitcoin were being traded for about $135, nowadays they are moving towards $5,000. But some established members of the industry say they are alarmed by the ICO boom and want tougher regulation. “There are people in the ICO market right now who will end up in orange jumpsuits,” said Brad Garlinghouse, chief executive of Ripple, a company that provides interbank payment software using blockchain and runs its own virtual currency, XRP.