Huobi co-founder talks about the difficulties of managing a $400 million venture capital fund: “Old money has all but departed.”

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Co-founder of cryptocurrency exchange Huobi Global Du Jun recently revealed new perspective on his experience managing ABCDE Capital, a $400 million Web 3.0 venture capital (VC) fund, in a tweet dated Dec. 12. Jun claims that the concept for ABCDE Capital first surfaced in March and that by April it had been officially registered in Singapore. But in the wake of the $40 billion Terra Luna collapse in May, Jun claimed that “old money had all but departed.”

Unfazed, Jun added, “a few partners pooled tens of millions of dollars to invest” and the VC fund was fully functioning in August. Although the initial report from early November showed “extremely good” results, Jun remarked that the industry’s predictions for the eventual collapse of FTX were “way above” those:

“Layoffs, pay reductions, and contraction emerged as key issues for cryptocurrency businesses. One had hoped that the conflict between FTX and Binance would promote robust industry growth, but it turned out that FTX was so helpless that it just gave up, ushering in a tsunami of disaster. Currently, Binance has a market share of over 75%, and whether he likes it or not, CZ’s [Binance CEO Changpeng Zhao] stance on regulation is representative of the whole sector. This presents a significant challenge for him.

Jun ascribed the last summer’s growth in decentralised finance, or DeFi, to the U.S. Federal Reserve’s quantitative easing (QE) policies. Tying it to regulation, Jun claimed that the QE-era entry of major institutional investors into the DeFi market was made possible in large part because firms like Coinbase, Circle, Grayscale, and Paxos “actively embraced regulation” and permitted them to do so.

“After FTX’s collapse, established old money and governmental organisations were terrified or even appalled by the disorderly and anarchic cryptosphere. For a very long time after that, neither sovereign wealth funds nor governments will embrace lenient regulations that foster innovation and development in the cryptocurrency industry.”

Jun also disclosed that since ABCDE Capital started making investments in August, the company has grown its portfolio to include seven businesses in the security, data, social, zero knowledge, and nonfungible tokens sectors. The co-founder wrote, “ABCDE only invests in 15-20 companies annually; a good firm is not afraid of the bear market, referrals are welcome, let’s continue!”

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