Retail Traders Left Exposed in High-Stakes Crypto Treasury Deals (bloomberg.com)
- Reference: 0180075024
- News link: https://tech.slashdot.org/story/25/11/14/1739233/retail-traders-left-exposed-in-high-stakes-crypto-treasury-deals
- Source link: https://www.bloomberg.com/news/articles/2025-11-14/retail-traders-left-exposed-in-high-stakes-crypto-treasury-deals
> Executives are turning to [1]a novel structure to fund crypto accumulation vehicles as investor appetite thins. They're called in-kind contributions, and they now account for a growing share of digital-asset treasury, or DAT, deals. Instead of raising cash to buy tokens in the open market, DAT sponsors contribute large slugs of their own crypto, often unlisted and hard to value.
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> Digital-asset treasuries are a new breed of public company built to hold concentrated crypto positions. The structure surged in 2025 as small-cap firms, especially in biotech and mining, reinvented themselves as digital-asset proxies. Sponsors provide tokens or raise money to buy them, and the stock then trades as a kind of listed bet on crypto. For insiders, it's a shortcut to liquidity. For investors, a wager on upside. But not all DATs carry the same level of risk. Earlier deals raised money to buy tokens through regular markets, which offered at least some independent price check. In-kind contributions skip that step -- letting insiders decide what their tokens are worth, sometimes before the token even trades publicly. That shift means pricing and trading risks land more squarely on shareholders, many of them retail investors.
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> Investor faith is already wobbling. Many DATs that once traded above the value of their holdings now trade below it. As insiders supply the tokens and set their price, it's becoming harder for investors to tell what these deals are really worth, or when to get out. The in-kind structure was on full display in a recent $545 million private placement by Tharimmune Inc., a biotech firm-turned-crypto proxy, to set up a buyer of Canton Coins. About 80% of the raise came in the form of unlisted Canton tokens, priced at 20 cents each, according to an investor presentation seen by Bloomberg News. The token began trading on exchanges Nov. 10 and is now around 11 cents, CoinGecko data show.
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> More deals are following the same template. In these placements, insiders contribute tokens -- sometimes illiquid or unlisted -- to form a treasury, lock in valuations and seed the perception of market demand. But when tokens list below deal price, public shareholders absorb the difference. [...] Then there's Flora Growth Corp., a Nasdaq-listed company that announced a $401 million deal to start acquiring Zero Gravity tokens in September. On closer inspection, the firm had raised just $35 million in cash to pair with a $366 million in-kind contribution of then-unlisted 0G tokens. Those tokens were priced at around $3 a piece; they subsequently listed, and are now trading at about $1.20.
[1] https://www.bloomberg.com/news/articles/2025-11-14/retail-traders-left-exposed-in-high-stakes-crypto-treasury-deals
A fool and their money... (Score:2)
So if I read this right, insiders are setting the value of something that doesn't physically exist, investors buy into something that doesn't exist, then when the value of the thing that doesn't exist goes down and investors try to sell the thing that doesn't exist, the insiders buy the thing that doesn't exist for less than it was worth when it was sold, so they pocket s profit on the trading of something that didn't exist.
Wow talk about falling off the common sense cliff.
Re:A fool and their money... (Score:4, Informative)
I don't think it's quite that.
Normally, if I'm going to create a fund what I do is raise money from investors, go out and buy the underlying assets for my fund and then give the investors shares.
The investors get two things, access to my skill at investing, and the ability to spread their risk across the market without having to have hundreds of separate holdings.
What's happening here is, instead, the fund is being funded by assets the fund manager already holds but aren't really liquid and so are hard to price.
But once they've sold the shares in the fund, they've sold their hard to value asset for cash without having to actually find a buyer for a multi-hundred million holding or even having to properly value it.
Re: (Score:2)
If your characterization of this is accurate, then it's similar to an ETF but for crypto. Or if you're more cynical, it's like a Collateralized Debt Obligation.
Re: (Score:2)
Yes, similar to an etf.
Perhaps a non-crypto example would be an ETF property fund.
Except the fund was formed by the investors putting in property they held rather than money.
Then they offload the ETF shares to the unsuspecting investor who trusts the value the fund has put on its assets.
Re: (Score:2)
Or if you're more cynical, it's like a Collateralized Debt Obligation
Thanks. I was thinking the same thing. And just like a CDO, what happens when someone doesn't, or can't, know the value of the underlying security?
Re: (Score:2)
Whichever way you spin it, it's a scam. Perhaps fraud even, though I don't know about the legalities around setting up these kinds of funds.
Re: (Score:2)
Need to get Drew Carey to narrate this.
"where everything is made up and the points don't matter."
I love the smell of scammery in the morning! (Score:2)
And now that the economy is becoming increasingly predicated on vapourcoin 'currencies', my sig seems even more relevant!
I might have to change it though, now that even people who have a few decades behind them also are - or are poised to to be - "pitiable suckers".
When you hear about a novel financial structure (Score:2)
Run the other way. Do not look back.
If anything could ever justify requiring "qualified investors", it's financial novelties. That retail investors would be exposed to this but aren't allowed to invest in the funds that make the rich richer, is a bright red sign indicating something is wrong with our financial regulations.
Private equity - sorry, too complicated for the average investor. You already have to be rich to use this straightforward thing that makes you richer.
Hedge funds - sorry, too comp
Two bubbles collapsing at once (Score:2)
I figured at this point I was wrong about crypto, but I guess it was once again a case of the market being irrational longer than expected.
Re: Two bubbles collapsing at once (Score:1)
If markets can be irrational for decades, why continually try to interpret inflation rationally? Why not simply index incomes to inflation and print a basic income?
Ye olde Pump and Dump with Crypto (Score:2)
"insiders supply the tokens and set their price"
magic beans (Score:2)
I planted my magic beans. My magic money vine has begun to grow and is headed to the moon. With this exclusive offer you can get in on the ground floor...
Re: (Score:2)
I'm not falling for that one again! If it's already growing, then the "ground floor" is already too high to reach. Last guy tried to sell me a ladder too, but it was already too short.
The greater fool theory. (Score:2)
That's a lot of words to explain crypto only works as long as a fool is willing to pay more than you. It looks like they now have to actually confuse the newer fools for them to be scammed.
Re: The greater fool theory. (Score:1)
What if that other fool has a hedge?
Re: (Score:2)
Because breaking it worse isn't a fix?
Re: (Score:2)
The very notion of "decentralized finance" makes no sense. For one, past the issuing authority, it is decentralized. There are lots of banks and financial institutions. And somehow, they expected that this wouldn't still end up being dominated by large financial interests? Well, I suspect they didn't, someone just wanted a new way to become a major financial institution themselves.
None of it ever made any sense. Currency whose value is processing its transactions by burning electricity? So, it's va
Make sense now (Score:1)
While many American companies are technically worth more than some Western nations, they eventually lose those mantles because the nations can print their own money. Just as MMT made it OK for nations to print their money ad nauseam to pay debts, crypto clearly offers corporations the holy grail of printing their own net worth.
Bitcoin crashed down to $95K currently (Score:2)
Interesting how, as expected, Slashdot starts [1]putting up stories related to crypto [slashdot.org] after Bitcoin has basically crashing down to $95K right now (though of course no actual story about that ). Clearly designed to try to [2]pump up the crypto world [slashdot.org] again, as Slashdot [3]usually does. [slashdot.org].
[1] https://slashdot.org/comments.pl?sid=23522683&cid=64979895
[2] https://slashdot.org/comments.pl?sid=23517431&cid=64937203
[3] https://slashdot.org/comments.pl?sid=23522683&cid=64979895
Re: Crypto, home of incomprehensible scams (Score:1)
What if offensive people played at scamming each other with fictitious assets, as if they had a sandbox to play in, while the real economy sustained itself because of a basic income? If those virtual assets crash, why should it spread by contagion and impose scarcity on the most vulnerable?
Re: (Score:2)
No one would play in the sandbox if they didn't think it was valuable. You may as well ask why there aren't more people trying to scam others out of Koolaid points. No one bothers to try to steal anyone's NFTs anymore for similar reasons.
A basic income isn't a magical fix to economic woes either. If poorly implemented it may do more harm than good. The best arguments for implementing one now is that it would be less expensive to administer than the current welfare state / social safety net.