Times are definitely not looking good for Digital Asset Treasuries (DATs), despite their popularity earlier this year. This situation has just prompted the founder of the Huobi exchange to abandon his $1 billion Ethereum-based project.
A $1 billion Ethereum DAT throws in the towel
The rapid and unprecedented rise of Digital Asset Treasuries (DATs) in the first few months of the year clearly fueled the cryptocurrency market rally, with massive and recurring purchases estimated in the billions of dollars.
This surge now mirrors the current collapse of this fledgling sector, with publicly traded companies selling off the crypto assets held in their treasuries to buy back their own shares, while leading investors are reducing their initial exposure.
A difficult realization apparently faced by Li Lin, founder of the cryptocurrency exchange platform Huobi, who was behind an ambitious Ethereum Treasury project estimated at $1 billion, announced on October 20.
Indeed, recent information shared by the X account Wu Blockchain indicates that this Digital Asset Treasury was put on hold before it even truly existed, involving a full refund of the funds committed by its main investors: Shen Bo (co-founder of Fenbushi Capital), Xiao Feng (CEO of HashKey Group), and Cai Wensheng (founder of Meitu).
Exclusive: The $1 billion Ethereum DAT proposed by leading Asian crypto investors has been put on hold; a return of the capital invested is expected. Several authoritative sources have confirmed this development.
Wu Blockchain
A knockout defeat following the October 11 crash
In fact, it appears that this withdrawal is a direct consequence of the repercussions caused by the crypto market crash on October 11. This reversal is seen as unfavorable for the launch of this DAT, particularly with Ether (ETH) having returned to the $3,000 level in recent days.
Ether (ETH) back at the $3,000 level
It should be noted that the only other Ethereum mining operation of this scale, Bitmine, is currently facing significant headwinds, to the point that billionaire Peter Thiel reduced his stake in the company by half earlier this week.
At the same time, its president and Wall Street veteran, Tom Lee, is trying to sell a “Wall Street ETH supercycle driven by blockchain” that is yet to come—one that makes one wonder if it isn’t merely an attempt to reassure his shareholders.
In any case, this premature collapse of an Ethereum treasury that was projected to reach $1 billion deals another blow to the Digital Asset Treasury sector. And it’s safe to say that the worst may still be ahead, given the poor performance of the crypto market.
