Justin Bons, Founder and CIO of Cyber Capital Europe’s oldest cryptocurrency fund, criticized the current dominant finance model in the cryptocurrency market based on Venture Capitalists’ (VCs) fundraising.
According to Justin Bons, cryptocurrencies are currently dominated by “predatory VCs.” This situation, according to Bons, stems from regulatory pressures that have made Initial Coin Offerings (ICOs) effectively illegal, handing over the entire early-stage market to VCs.
Previously, Finbold reported another analyst sharing a similar view about the topic. Miles Deutscher highlighted these new fundraising dynamics as one of the “fundamental flaws” preventing cryptocurrencies from reaching higher grounds.
In summary, the two analysts seem to agree that the VC model punishes retail and drives small investors away.
The rise of VC dominance in crypto
Notably, Bons argues that the current state of affairs in the crypto market is far from ideal. He points out that VCs often get in on “pre-pre-pre-sales” at heavily discounted prices, only to sell to retail investors at inflated rates later. This practice, he contends, is unfair and exploitative.
The analyst emphasizes the need to bring back ICOs, which he believes democratized fundraising in the crypto space. “Fundraising in crypto used to be democratized; anyone could participate on equal terms,” Bons states.
He further explains that the current system, with its stringent requirements for accredited investors, effectively puts high-return investment opportunities out of reach for retail and less affluent investors.
Conclusion: A call for change
In conclusion, Justin Bons calls for a reevaluation of the current regulatory landscape. He argues that banning retail participation in early-stage investments only leads to their exploitation at a later stage. The analyst believes that convincing regulators to allow retail investors to participate on a level playing field is crucial for the healthy development of the crypto market.
While acknowledging the important role VCs play in funding early-stage projects, Bons maintains that regulation has artificially pushed their prominence to unhealthy levels. He advocates for a return to a more open and transparent investment model, where knowledge, rather than privileged access, determines investment success.
