Qureshi started playing poker professionally at age 16, mostly sticking to online games because he wasn’t allowed in casinos. By the time he was 21, Qureshi had raked in almost $2 million, but he realized that he didn’t want to make the game his life. He made a bet with a friend that if he ever played another hand of professional poker, Qureshi would have to pay him $100,000. “That was my way of sealing off the decision for myself,” he told Fortune.The crypto venture ecosystem is going through a “mass extin ...

Group 1: Quarterly Momentum and Funding Trends - In Q1 2025, crypto venture investment reached approximately $4.8B, the highest since Q3 2022, followed by a dip to around $2.0B in Q2, and a rebound of approximately 47% QoQ to $13B in Q3 2025, indicating a return to early-2022 levels by mid-2025 [1][2] - By Q4 2025, year-to-date funding exceeded $30B, surpassing 2024's total by $21B, with Q3 2025 alone raising about $13B, the largest quarter since Q1 2022 [2][4] - The increase in capital deployment in 2025 was primarily driven by larger deal sizes rather than an increase in deal counts, with approximately 800+ startup VC deals in 2025 YTD, down about 13% from 2024 [2][3] Group 2: Deal Size and Stage Distribution - The deal size distribution from 2023 to 2025 shows a shift towards larger rounds, with deals under $10M accounting for over 75% of all activity in 2024, while this share fell to around 61% in 2025, indicating growth in the $10–50M and $50M+ segments [10][11] - Late-stage rounds accounted for approximately 45% of total capital in 2025, with about 10% of all deals exceeding $50M, signaling a return of large-check deployment [12][13] - The fundraising landscape shifted from 2023 to 2025, with late-stage rounds capturing the majority of total capital by mid-2025, while early-stage activity remained the core driver of deal count [15][24] Group 3: Sector Preferences and Emerging Narratives - Investor preferences have rotated significantly, with a focus on core infrastructure, financial plumbing, and new themes like real-world assets (RWA) and AI+crypto, moving away from previous hot areas like DeFi protocols and NFTs [26][30] - DeFi-related startups led all categories in H1 2025 with $6.2B raised, driven by stablecoin issuers and institutional DeFi, while infrastructure also saw significant funding, raising approximately $3.3B [30][32] - The AI-crypto convergence emerged as a credible niche in 2025, with around $0.7B raised, indicating a growing interest in AI-driven applications within the crypto space [36][37] Group 4: Geographic Distribution of Funding - The geographic distribution of crypto venture funding became more diverse from 2023 to 2025, with the US remaining the largest hub but gradually easing in dominance, capturing 31% of capital and 41% of deal count in 2025 [62][63] - Asia's footprint expanded sharply, collectively representing around 20–30% of global crypto VC funding by 2025, driven by rising CeFi hubs and gaming ecosystems [64][65] - Europe gained momentum after regulatory clarity with MiCA, hosting major DeFi teams and frequent Series A/B raises, contributing to a meaningful share of global VC flows [66][67] Group 5: Investor Behavior and Market Dynamics - The number of active US venture firms fell by more than 25% from 2021 to 2024, leading to a concentration of capital in a small core of repeat crypto-native and crossover investors [74][75] - By 2025, late-stage funding captured approximately 56% of capital, indicating a shift towards larger, more selective investments, with a clear barbell pattern emerging in funding behavior [78][90] - The market has matured significantly, with investors prioritizing fundamentals such as revenue traction and regulatory readiness, moving away from the speculative nature of previous cycles [92][94]

Core Insights - Scrutiny around Shima Capital intensified following fraud charges against its founder Yida Gao by US regulators, indicating potential operational changes and a possible wind-down of the firm [1][2] Regulatory Actions - The US Securities and Exchange Commission (SEC) charged Shima Capital Management LLC and Yida Gao on November 25, alleging investor fraud related to fundraising for the firm's debut crypto venture fund [2] - The SEC claims that between 2021 and 2023, Gao and Shima Capital raised nearly $170 million from investors using misleading marketing materials regarding Gao's past investment performance [3] Internal Developments - Internal communications suggest that Gao plans to step down as managing director and pursue an "orderly wind-down" of the firm, with independent advisers overseeing the process [4][5] - Gao indicated that the SEC and Department of Justice actions pertain to his personal conduct rather than the firm's portfolio companies [4] Allegations of Misrepresentation - The SEC's complaint outlines two main allegations, including that Shima Capital's pitch deck exaggerated Gao's previous investment results, claiming a 90x return on one investment when the actual return was closer to 2.8x [6] - Gao reportedly dismissed discrepancies as clerical errors when questioned by investors [6]

Core Viewpoint - Shima Capital is undergoing an "orderly wind-down" following a lawsuit from the SEC against its founder, Yida Gao, for allegedly defrauding investors by raising nearly $170 million through misleading statements [1][3]. Company Summary - The SEC's complaint highlights that from May 2021 to March 2023, Shima Capital raised over $158 million from 349 investors for a crypto-asset-focused venture fund, using a pitch deck that misrepresented Gao's investment track record [3]. - The SEC alleges that Gao falsely claimed a prior investment yielded a 90x return, while the actual return was only 2.8x [2]. - In a separate scheme, Gao raised $11.9 million for a Special Purpose Vehicle to invest in BitClout tokens, where he sold tokens at a profit, retaining $1.9 million in undisclosed profits [4][5]. Industry Summary - The collapse of Shima Capital serves as a warning for the crypto venture capital sector, indicating a shift towards increased scrutiny and compliance regarding performance metrics [6]. - The SEC's focus on inflated investment track records suggests that Limited Partners will demand more rigorous due diligence, including audited proof of returns and scrutiny of illiquid token valuations [6].