Dragonfly Capital Managing Partner Challenges VC Token Dumping Theories

Haseeb Qureshi of Dragonfly Capital expressed concern regarding theories surrounding recent listings on Binance, alluding to the complexities behind the market fluctuations.

The decline in prices of tokens listed on Binance over the past six months may not be the result of venture capital dumping, but rather a more nuanced interplay of market dynamics, suggests Haseeb Qureshi, managing partner at Dragonfly Capital.

In an article published on May 19, Qureshi expressed concern about data published by @tradetheflow_, which found that recent Binance listings, dubbed “high FDV, low float” tokens, have suffered significant declines despite initial optimism.

These tokens, which boast high, fully diluted valuations but minimal circulating supply at the time of listing, have given rise to theories of market manipulation.

Among the prevailing theories are concerns about venture capital (VC) and Key Opinion Leaders (KOLs) dumping tokens on retail investors, a shift in retail interest towards memecoinand challenges related to inadequate supply for meaningful pricing.

However, Qureshi disputes these claims, stating that “every top-tier VC you can think of has at least a 1-year cliff and multi-year vest before they get their tokens.”

“So here’s why this story makes no sense: each of these tokens is less than a year away from TGE, which means VCs with 1-year cliffs are still stuck!”

Haseeb Qureshi

Qureshi, who clarified that his views do not represent Dragonfly Capital as the firm’s staff have different opinions, suggested an alternative explanation. He noted that the stability of these tokens persisted until mid-April, when a broader market downturn occurred, partly due to geopolitical tensions in the Middle East.

“So what’s the best explanation for why these coins are still declining? My explanation: These new projects have all been mentally trashed as “risky new coins”. Appetite for the “risky basket of new coins” waned in April and has never recovered. The market decided they didn’t want to buy them back.”

Haseeb Qureshi

He also addressed theories about retail traders selling their tokens to invest in memecoins, describing these theories as unfounded, “memecoin mania was in full swing in March, but the basket collapsed in April, a month and a half later. “

In a May 17 X post, a cryptocurrency researcher at SwissBorg with the alias @tradetheflow_ revealed that 80% of tokens listed on Binance in the last six months have lost value since their listing. The analyst noted that most of these tokens, which suffered declines, were backed by major venture capital firms such as Coinbase Ventures, Pantera Capital, Paradigm, and Dragonfly.

Only two memecoins and one token not backed by any major venture capital firm have managed to show positive returns since their listing, the researcher added, underscoring the need for more transparent and robust mechanisms in token listings.

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