The ambitious $1 billion Ethereum Digital Asset Treasury (DAT) initiative, spearheaded by notable figures in the Asian cryptocurrency sector, has been put on indefinite hold. This decision, reported by Wu Blockchain, comes in response to the recent downturn experienced in the cryptocurrency market.
The DAT project aimed to establish a substantial digital asset treasury firm by acquiring a Nasdaq-listed shell company, thereby facilitating regulated institutional exposure to ETH. The initiative had successfully attracted $200 million in funding, all of which has been returned to investors following the project”s suspension.
Among the key players involved were Li Lin, founder of Huobi, Shen Bo from Fenbushi Capital, Xiao Feng, CEO of Hashkey Group, and Cai Wensheng, founder of Meitu. These prominent figures were instrumental in shaping the vision for the treasury firm, which sought to emulate strategies similar to those employed by MicroStrategy, leveraging public listings to acquire cryptocurrency assets.
However, the recent market volatility has severely impacted the feasibility of the project. The mid-October crash resulted in a staggering liquidation of over $19 billion in cryptocurrency futures, marking the most significant event of its kind in the history of the market. This downturn was primarily driven by geopolitical tensions, particularly a 100% tariff on Chinese imports announced by the U.S. government, which triggered widespread panic selling.
During this tumultuous period, Bitcoin experienced a sharp decline, dropping approximately $15,000 at its lowest point, while many altcoins suffered losses of up to 50%. The liquidity crisis was exacerbated by excessive leverage in the market, revealing vulnerabilities in how crypto trades are settled.
As a result, stock prices for various digital asset treasury companies plummeted, raising concerns about the financial stability of entities involved in crypto reserves. Currently, many Ethereum DAT firms are reporting their market net asset value (mNAV) below 1; for instance, BitMine”s mNAV stands at 0.86 and SharpLink”s at 0.85.
Given the multitude of factors at play, including geopolitical strife, over-leverage, collateral issues, and inadequate clearing systems on exchanges, investor confidence has significantly waned. The recent developments have prompted leaders of the suspended project to prioritize investor interests, emphasizing the importance of returning funds promptly.
Looking ahead, there remains a possibility for the initiative”s revival, contingent on market recovery and improved regulatory conditions surrounding Nasdaq listings and digital asset treasury companies.
In related news, the Singapore Exchange (SGX) is set to launch BTC and ETH perpetual futures on November 24, highlighting ongoing developments within the cryptocurrency landscape.
