The rising cryptocurrency boom has sparked a fundraising scheme called initial coin offerings that have become a money-pumping machine for startups but also have a problematic reputation.

Masahiro Yasu, 29, chief executive officer of Tokyo-based startup Alis Co., experienced the power of the ICO when his firm raised ¥100 million in virtual currencies in just four minutes last March.

"We were confident of our business plan . . . but we were surprised when we could actually attract that much money that quickly," Yasu said in an interview last month, adding that his firm successfully raised its goal of over ¥400 million in about 10 days.