Large venture capitalists purchase certain encryption tokens at low prices, founder's arrest incident sparks follow-up.

Recently, a piece of news has caused a stir in the encryption venture capital circle - a well-known messaging software founder was detained in France. This incident has had a significant impact on institutions that invested in a certain crypto Token closely related to the messaging software.

It is reported that several institutions, including a well-known investment company, a blockchain gaming company, and a venture capital firm, have invested in this encryption Token. A well-known messaging software is currently using its blockchain to process instant payments and other services. Sources reveal that a well-known investment company invested over $100 million in this encryption Token earlier this year.

The logic behind these investments is that a well-known messaging software is expected to develop into a digital asset "super application" similar to WeChat, with its 900 million users relying on this encryption Token for payments, blockchain games, and other aspects. From February to early July this year, the price of this Token surged fourfold, and the total locked value of its underlying blockchain once exceeded 1 billion USD.

However, the founder of the messaging software has been detained for being accused of ineffectively combating crime on the platform, exposing the potential risks of the project. He was accused of being involved in the distribution of child pornography and engaging in drug trafficking on the application. In response, the messaging software stated that it complies with European laws.

After the founder was arrested on August 24th in the suburbs of Paris, the price of the encryption token plummeted by about 20%, and then slightly rebounded. Data shows that the total locked value of its underlying blockchain has fallen to $573 million.

The founder of the encryption venture capital 1kx, Clausen, stated: "Most investors believe that this application itself will greatly promote the adoption of the encryption Token network. Now the company and its founders are facing a black swan event, which may raise questions about the future."

Those venture capitalists who invest heavily in the encryption Token ( usually commit to not selling the Token for at least a year. ) is assessing whether France's actions against the founder will lead to user attrition. This messaging software is quite popular in the encryption circle, largely due to its loose regulations, which have also led it into legal disputes.

A well-known investment firm stated that this encryption token is its largest investment, but did not disclose the specific amount. The foundation of the token stated that it has never raised funds. A blockchain gaming company did not comment on its investment.

Some supporters of the encryption Token remain optimistic. A co-founder of a certain encryption market maker stated that they purchased "millions" of dollars worth of Tokens on the open market after the price of the encryption Token plummeted.

For venture capitalists, investing in tokens has advantages such as quick exits. Typically, tokens begin to unlock after 12 months and can then be gradually sold. The volatility of tokens also allows investors to gain a more comprehensive understanding of project progress.

Token trading often involves significant discounts. It is reported that a well-known investment company purchased the encryption Token at a price 40% below the market price. Based on an average price of about $6.32 in May, this investment is still profitable.

However, investing in tokens also faces the risk of extremely unstable assets. Once problems arise, the impact will be immediately evident. The collapse of a well-known stablecoin in May 2022 is a typical case, resulting in significant losses for several investment institutions and triggering a series of chain reactions.