New Crypto Deals Put Retail Investors at Risk After $17 Billion Wipeout
As investor appetite for crypto wanes, executives are increasingly using “in-kind contributions” to fund digital-asset treasury (DAT) deals, shifting significant risk onto retail shareholders. These structures allow sponsors to contribute their own often illiquid tokens at self-determined valuations, bypassing independent price checks and leaving public investors exposed when prices collapse.
Key Takeaways
- DAT sponsors are using in-kind contributions of their own tokens instead of raising cash
- Insiders set token valuations, sometimes before public trading begins
- Retail investors absorb losses when tokens list below deal prices
- Singapore research shows $17 billion in retail losses from similar structures
How In-Kind DATs Work
Digital-asset treasuries are public companies designed to hold concentrated crypto positions. The structure gained popularity in 2025 as small-cap firms in biotech and mining reinvented themselves as crypto proxies. While earlier DATs raised cash to buy tokens through regular markets, the new in-kind model lets sponsors contribute their own tokens directly.
This approach skips independent price verification, allowing insiders to decide what their tokens are worth. The shift means pricing and trading risks fall more heavily on shareholders, particularly retail investors who may struggle to assess the true value of these deals.
Real-World Examples Show the Pattern
Tharimmune Inc.’s recent $545 million private placement demonstrated the in-kind structure in action. Approximately 80% of the raise came as unlisted Canton tokens priced at 20 cents each. When the token began trading on November 10, it quickly fell to around 11 cents.
Other companies followed similar templates:
- Alt5 Sigma Corp. raised $1.5 billion with half coming as WLFI tokens priced at 20 cents before exchange trading
- Flora Growth Corp. announced a $401 million deal with only $35 million in cash and $366 million in then-unlisted 0G tokens priced at $3 (now trading at $1.20)
Both companies’ shares have dropped more than 65% since adopting DAT strategies.
Expert Warnings About Retail Risk
Chris Holland, partner at Singaporean consulting firm HM, explained the danger: “Ultimately, if market sentiment shifts, public investors in the fund, particularly retail, may be left exposed if the underlying illiquidity is finally tested, leaving them to absorb the very losses the sponsor’s contribution structure was designed to sidestep.”
Akshat Vaidya of Maelstrom provided stark mathematics: “An 80% in-kind DAT is effectively a thin equity wrapper around one single volatile token. If the token drops 50%, the share price falls 80%-100% because the premium evaporates at the same time that forced sellers hit the bid.”
Leon Foong of Mythos Venture Partners noted that in-kind contributions create “a reflexivity which can act both ways — on the upside but also a downward spiral,” with illiquid tokens posing the greatest danger.
The Exception That Proves the Rule
Not all in-kind contributions raise concerns. In July, Adam Back’s Blockstream contributed 25,000 Bitcoin (worth about $3 billion at the time) to a treasury company. This structure didn’t raise eyebrows because Bitcoin is highly liquid and widely distributed, unlike the smaller, untested tokens dominating recent deals.
As Vaidya summarized, contributions of less-liquid tokens create “a very delicate balance, because the DAT sponsors are usually the same people who hold the most of the underlying token as well.”
