Imagine a quiet café, the clink of cups, and a conversation about crypto. Today, our topic is a hot one, stirring up quite a bit of chatter in the digital asset world. It is about something called Digital Asset Treasuries, or DATs. These are companies that hold large amounts of cryptocurrencies.
- Digital Asset Treasuries (DATs) are companies holding significant cryptocurrency reserves, sparking debate about their role in boosting token value versus facilitating insider exits.
- Recent trends show a rise in altcoin-focused DATs, often involving small Nasdaq-listed firms with direct ties to token creators, raising ethical concerns about preferential access and information.
- Examples like World Liberty Financial and The Open Network (TON) highlight deals where companies acquire tokens at substantial discounts through existing relationships, drawing scrutiny for potential insider dealings and “circular-economy optics.”
On one side, you have folks who say DATs are a smart way to boost a token’s reach and value. They see them as a sign of growth. On the other side, there are critics who raise an eyebrow. They suggest these treasuries might just be a clever way for big holders to cash out quietly, dressed up as something else.
Remember Michael Saylor? About five years ago, he made headlines by turning his software company, MicroStrategy, into a Bitcoin accumulator. When Bitcoin’s price soared, MicroStrategy’s shareholder value went with it. This move looked genius to many, and it inspired a wave of copycats.
Initially, this trend focused on Bitcoin. Then, in 2024, it expanded to other major coins like Ethereum and Solana. But the real buzz, and the real questions, started when a new kind of DAT appeared. These were altcoin-focused treasuries, often small Nasdaq-listed firms, with direct ties to the very people who created or heavily supported the tokens.
Steven Zheng, Research Director at The Block, put it plainly. He said many of these DAT formations involve insiders of the assets they are buying. This raises ethical questions about who gets special access and information. It makes you wonder, doesn’t it?
The Trump-Backed Token and a Deep Discount
Let’s look at a recent example that caught many eyes. World Liberty Financial, a crypto venture backed by the Trump family, announced it was raising $1.5 billion. The goal? To start a treasury for its WLFI governance token. This token isn’t even tradeable on exchanges yet.
Zach Witkoff, a co-founder of World Liberty, shared some interesting details. He spoke about transforming a small tech firm, ALT5, into a WLFI accumulation machine. He said ALT5 acquired these WLFI tokens at a $0.20 valuation.
Witkoff noted that pre-market trading for WLFI was between $0.35 and $0.90. He then explained that ALT5’s acquisition price meant they got the tokens at about a 64% discount. He believes this will be quite good for shareholders. World Liberty was the lead investor, essentially swapping WLFI tokens for ALT5 shares. Eric Trump will also work on ALT5’s board.
Then there is The Open Network, or TON. Nasdaq-listed Verb Technology recently said it would raise $558 million to buy Toncoin, TON’s native token. Verb Technology is even rebranding as TON Strategy. They expect to buy TON at a significant discount.
An investor presentation filed with the SEC stated that TON Strategy believes it can get a large supply of TON at about a 40% discount to the market price. This is thanks to existing relationships within the TON ecosystem. Pavel Durov, who runs Telegram, even owns some Toncoin himself.
Kingsway Capital, a venture capital firm, participated in this deal. Its CEO, Manuel Stotz, now serves as president of the TON Foundation and executive chairman of TON Strategy. It’s a tight circle, and some long-time crypto insiders say these closed-loop dealings feel familiar.
One industry insider, who preferred to stay anonymous, pointed out that what is a gray area in crypto could be considered insider information in traditional markets. It is a thought that makes you pause, isn’t it?
Other High-Profile Deals Under Scrutiny
World Liberty and TON Strategy are not alone in this trend. Consider Binance founder Changpeng Zhao. His family investment office led a $500 million investment to turn Nasdaq-listed CEA Industries into a BNB treasury. Zhao has said that 98% of his crypto holdings are in BNB.
Then there is Tron founder Justin Sun. In June, SRM Entertainment, a toy maker, announced a $100 million equity investment to start a DAT strategy focused on TRX, Tron’s native token. Sun was named an advisor to the company. SRM Entertainment then rebranded as Tron Inc.
Tron Inc. now holds 365 million TRX tokens, making it the public company with the largest TRX holding. The company even filed a statement to issue up to $1 billion in securities to buy more TRX. It shows a clear, deep connection between the treasury and the token’s creator.
The DAT deal for Hyperliquid’s HYPE token also involved key players. Paradigm, a venture capital backer of Hyperliquid, helped structure the deal. Sonnet BioTherapeutics, a biotech firm, is transforming into Hyperliquid Strategies Inc. to become a HYPE treasury.
Here’s where it gets interesting. Days before the announcement, Sonnet’s stock, which had been stagnant, suddenly shot up over 300%. After the news broke, shares jumped again, nearly reaching $10. This kind of pre-announcement share movement can certainly raise questions about who knew what, and when.
Kadan Stadelmann, CTO of Komoto, did not mince words when asked about this new wave of DATs. He called it “circular-economy optics” that gives crypto skeptics plenty to talk about. He said, “When a treasury firm takes money from VCs or foundations to buy tokens those same VCs already hold, you’re not managing assets, you’re manufacturing exit liquidity. It’s self-dealing, dressed up as capital deployment.”
A Different Path? The SUI Treasury
Not everyone sees these DATs in the same light. Mara Schmiedt, CEO of Alluvial, offers a more hopeful view. She believes that crypto projects forming publicly listed companies can actually bring more accountability. Public companies, she notes, have strict disclosure rules and conflict of interest policies. This could raise the bar for the entire crypto ecosystem.
The backers of the recently formed SUI treasury company seem to be trying to build trust. Stephen Mackintosh, CIO of Mill City Ventures, stated, “Insider trading is a crime.” His SUI-focused DAT has not bought any locked tokens from investors looking to get out of their vesting schedule.
Mill City Ventures, a Nasdaq-listed lender, shifted to a SUI treasury strategy through a $450 million private placement. Mackintosh, who co-founded the hedge fund Karatage (the lead investor), now helps lead Mill City. He has long-standing ties with both the SUI Foundation and Mysten Labs, the developers.
Mill City did negotiate a discount to buy SUI tokens from the SUI Foundation. However, this discount appears to be quite small, especially compared to the deals for World Liberty and TON. Mill City recently acquired 5.6 million more SUI tokens at an average price of $3.65, only slightly less than the market price of $3.80 to $3.90.
Mackintosh also said his team’s shares will be locked for 12 months. This is meant to show the SUI community and investors that they are focused on the long term. The tokens purchased from the SUI Foundation will be locked for about two years. He believes SUI will compound in value over the next decade, much like Michael Saylor proved with Bitcoin. It is about buying a scarce asset, he said.
So, where does this leave us? We have a new trend, Digital Asset Treasuries, with big names and big money involved. Some see it as a smart play for growth and visibility. Others see a potential for conflicts of interest and a quick exit for insiders. As the crypto space continues to evolve, keeping an eye on these developments, and asking the right questions, feels more important than ever.
Disclaimer: The Block is an independent media outlet that delivers news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block continues to operate independently to deliver objective, impactful, and timely information about the crypto industry. Here are our current financial disclosures.
