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A group of China’s most prominent cryptocurrency entrepreneurs—including Huobi founder Leon Li, HashKey Group chairman Xiao Feng, and Meitu co-founder Cai Wensheng—have scrapped a $500 million ether investment fund after bitcoin’s 30% crash wiped out institutional confidence.
The founders had secured $110 million in commitments for the digital asset treasury (DAT) before deciding to halt the project, citing extreme volatility and uncertainty that has gripped markets since October’s record highs, according to people familiar with the matter.
The shelved initiative marks one of the most prominent casualties of current crypto market conditions, which have triggered a slowdown in digital asset fundraising and heightened caution among institutional players.
The project was first revealed earlier this year and was intended to establish a DAT firm dedicated to investing in ether, the world’s second-largest cryptocurrency.
The decision was first reported by Wu Blockchain on Wednesday, and sources say the founders agreed that pressing ahead under such crypto market conditions risked unnecessary losses for backers.
The proposed DAT company was designed to mirror a trend seen in the United States, where publicly listed firms increase their market value by holding large reserves of cryptocurrencies.
The best-known example is Strategy (formerly MicroStrategy), which has accumulated nearly 650,000 bitcoin. Such firms surged in popularity over the past year as asset prices rose—yet the regulatory climate in Hong Kong has not embraced similar models.
The timing of the initiative collided with a dramatic reversal in crypto market conditions. Following record highs in early October, bitcoin crashed more than 30 per cent, contributing to a broader rout that wiped out roughly US$19 billion in leveraged bets. More than one million traders were liquidated as markets convulsed under extreme volatility.
Ether’s performance also slumped alongside bitcoin, amplifying concerns. Crypto analysts say the deterioration in crypto market conditions has made large-scale investment treasuries significantly riskier for both founders and early investors.
Bitcoin’s decline below US$90,000 this week—more than 4 per cent lower than at the start of 2025, and well below its peak earlier in the year—reinforced fears that the recovery many expected has not materialised. The lingering effects of October’s crash continue to distort sentiment.
Leon Li, now chairman of Hong Kong–listed crypto wealth management firm Sinohope Technology Holdings, had already signalled concerns. Speaking to investors earlier this month in Hong Kong, he warned that “the market wasn’t doing very well” and that the “macro outlook isn’t very clear either.”
His remarks reflected widening unease about global crypto market conditions, which have been undermined by weakening liquidity and broader macroeconomic uncertainty.
According to a video seen by the Post, the ether DAT partners had decided to hold off on the project to “avoid causing losses for investors,” including HongShan Capital Group and Yunfeng Financial Group.
At the same event, Meitu co-founder Cai added that the group would “wait for better timing” before considering a revival once crypto market conditions stabilize.
The founders had planned to create the DAT firm by acquiring a Nasdaq-listed shell company, making it easier to establish a publicly traded vehicle for institutional ether investment, according to an earlier Bloomberg report.
But with crypto market conditions still unsettled, insiders say any revival would require a sustained market recovery, clearer macroeconomic signals, and renewed confidence among institutional backers.
For now, the scrapped initiative highlights a broader trend: investors are stepping back, founders are recalibrating risk, and the industry is bracing for prolonged volatility.
The fate of the ether DAT initiative may ultimately depend on whether crypto market conditions show signs of stabilizing in the months ahead. Until then, this high-profile pause underscores how even the sector’s most experienced leaders are not immune to the pressures of a shifting digital asset landscape.
