High-stakes investment in TON by encryption venture capital, founder's arrest causes industry shock

Recently, news about the founder of a well-known messaging application being detained in France has caused quite a stir in the encryption investment circle. The founder has been accused of failing to effectively combat criminal activities on the platform, including the spread of illegal content and drug trafficking. This incident has not only affected the application itself but has also implicated the digital token Toncoin, which is closely related to it.

Toncoin is a highly regarded encryption project that has attracted the attention of several well-known investment institutions. It is reported that a large crypto venture capital fund invested over $100 million in Toncoin earlier this year. Investors are drawn to the vision behind Toncoin: transforming this messaging application with 900 million users into a "super app" that integrates payments, blockchain gaming, and more.

From February to early July this year, the value of Toncoin once soared to four times its original value, and the total locked value (TVL) on its blockchain TON also briefly surpassed the $1 billion mark. However, with the news of the founder's arrest, the price of Toncoin plummeted by about 20% in a short period of time. Although it has since recovered somewhat, the TVL of TON has fallen to $573 million.

For venture capitalists who have heavily invested in Toncoin, the current situation is concerning. They typically need to sign a lock-up agreement for at least one year and are now assessing whether this event will lead to a mass exodus of users from the messaging app. The app's popularity in the crypto circle is largely due to its relatively loose management style, but this is also the reason it has fallen into legal disputes.

However, there are also opportunities in a crisis. According to reports, a certain encryption market maker invested millions of dollars to increase its holdings of the token in the open market after the price of Toncoin plummeted.

It is worth noting that many venture capital institutions have adopted a so-called "token trading" model for investments in projects like TON. In this model, investors receive tokens instead of traditional stocks, and specialized liquidity funds are usually established to manage these short-term assets. The advantage of this investment method is that it allows for quicker exits, typically starting to gradually unlock and sell after 12 months.

However, token investments also face significant risks. Market volatility can directly reflect on investors' balance sheets, and once issues arise, the impact becomes immediate. The collapse of a well-known stablecoin project in May 2022 is a typical case, resulting in severe losses for multiple investment firms and even triggering a chain reaction throughout the entire encryption industry.

Despite the current challenging situation, some investors in Toncoin remain optimistic. It is reported that certain investment institutions have purchased Toncoin at a discount of 40% below market price, and even in the current market conditions, this investment is still in a profitable state. However, there are still many uncertainties regarding future developments, and investors need to closely monitor the situation and carefully assess the risks.