Avalanche blockchain aims to raise $1bn for crypto-hoarding companies
Two vehicles will buy millions of Avax tokens at discounted price
The non-profit group behind Avalanche, a blockchain used by Wall Street companies such as BlackRock and Visa, is in talks to create two cryptocurrency-hoarding vehicles in the US, as it tries to fund its bid to become the main digital ledger for capital markets.
Avalanche Foundation is in advanced discussions with investors over deals to launch one digital asset treasury company and convert another company into such a vehicle, according to two people with knowledge of the discussions. It hopes to raise about $1bn in total and to conclude the deals in the coming weeks.
The money raised will be used to purchase millions of Avax, the cryptocurrency attached to the Avalanche ledger. Avax would be available from Avalanche Foundation at a discounted price, the people said. Avalanche Foundation declined to comment.
The moves come despite a recent sharp fall in the share prices of many crypto treasury companies, in a sign that the stock market craze for vehicles that sell shares and bonds to fund token purchases may be fading.
Tokens linked to the ethereum and solana blockchains have soared in recent months, helped by a surge in fundraising by companies planning to stockpile crypto assets. Such companies have raised more than $16bn this year, according to data from Kaiko, in a model inspired by bitcoin treasury company Strategy.
Avalanche is among the blockchains being tested out by investment firms such as BlackRock, Apollo and Wellington Asset Management, which have trialled tokenised versions of funds on it. However, the network’s Avax token has largely missed out on the rally that has lifted rivals.
The first deal aimed to raise up to $500mn through a private investment led by Hivemind Capital in an existing Nasdaq-listed company, the people said. It was likely to be finalised at the end of the month, and Anthony Scaramucci, a crypto investor and former White House press secretary, was advising on the deal, they said. Hivemind confirmed it was working on a deal but declined to give further details. Scaramucci did not respond to a request for comment.
The second deal was via a special purpose acquisition vehicle, which is being sponsored by Dragonfly Capital, and was also looking to raise up to $500mn but might not be concluded until October, the people said. Dragonfly did not respond to a request for comment.
Both companies will initially purchase cut price Avax tokens held by the Avalanche Foundation. There are a maximum of 720mn Avax tokens in existence, with about 420mn of those currently in circulation.
Foundations that support crypto blockchains and associated communities through education or the organisation of conferences are common in crypto markets. Most are set up as not-for-profit organisations, allowing them to skirt US securities laws, and are based in low-tax jurisdictions.