Justin Bons, the founder and chief operating officer of Cyber Capital Europe, has sharply criticized the current financial model of the cryptocurrency market, which he believes is excessively dominated by venture capitalists (VC).
Bons argues that regulatory measures have effectively rendered initial coin offerings (ICOs) illegal, thereby concentrating investment opportunities in the hands of VCs and sidelining retail investors.
He compares this situation to a “boy’s club of VCs,” where stringent regulatory requirements such as KYC and AML processes create barriers for smaller investors.
“We need to bring ICOs back! Fundraising in crypto used to be democratized; anyone could participate on equal terms. Now, the market is dominated by predatory VCs instead!” tweeted Justin Bons on June 27, 2024.
He notes that these provisions require high minimum investment amounts and legal services that most retail investors cannot afford. This shift has moved the crypto market from its once democratized investment space to one where VCs provide early access at preferential prices and sell to retail investors at inflated prices.
Despite these criticisms, recent data from CryptoRank shows a modest recovery in crypto fundraising, with projects raising an average of $1 billion per month since March 2024. However, this is still below the levels observed during the boom of venture capital in 2021-2022.
Bons advocates for a return to a more open and transparent investment model, focusing on equal access rather than preferential opportunities for VCs. He believes that reintegrating retail investors into early-stage crypto investments is crucial for a healthier market.