The Truth Behind Hundreds of Millions of Dollars Raised by Crypto Projects
Farcaster was once the big hope for many airdrop hunters. The project raised 150 million USD from Paradigm, a16z, and a lineup of top-tier funds, reaching a unicorn valuation. Then in early 2026, Farcaster was handed over to Neynar, a startup that had raised only 14 million USD. The founder stepped away to start another project. Around the same time, Lens Protocol was also transferred to Mask Network. For many, the dream of turning participation into life-changing money vanished overnight.
Farcaster and Lens are not isolated cases. In 2025 alone, crypto projects announced a combined 50.6 billion USD in fundraising. Yet in reality, many projects that raised hundreds of millions still failed, sold themselves, or disappeared entirely. This raises a critical question: how much of that capital was actually real money?
Key Takeaways
- Large fundraising numbers in crypto do not equal real cash. Many rounds include tokens, convertible resources, or debt.
- Fundraising and airdrops are often used to create FOMO, inflate growth metrics, and provide exit liquidity for insiders.
- Retail investors have little legal protection, so press releases and big fund logos should not be taken at face value.
- The safest approach is to evaluate projects through products, teams, on-chain activity, and post-raise execution.
1. How Crypto Projects Actually Receive Capital When Fundraising?
The crypto community is no stranger to new projects announcing tens or hundreds of millions of dollars raised. The bigger the number, the more people rush in to farm airdrops, assuming that large funding means generous rewards. But have you ever stopped to ask what those numbers really mean and where the money actually comes from?
Below are the main ways crypto projects receive capital. These structures are not inherently wrong. The problem is that many projects do not disclose them clearly and instead highlight a single large headline number to create FOMO among retail investors.
1.1 Receiving Actual Cash
This is the ideal scenario everyone hopes for. An investment fund wires cash to the project team and the deal is done. In reality, it is rarely that simple. Most investments are paid out in tranches, tied to milestones such as product launches or user growth targets. If milestones are missed, later tranches can be delayed or canceled entirely.
The issue is that crypto projects almost never disclose these conditions. They announce something like “successfully raised 100 million USD” without clarifying how much has actually been received and how much depends on unmet milestones. To users, it looks like the project is sitting on 100 million USD in cash, while in reality it may only have a fraction of that amount.
1.2 Tokens Instead of Cash
This is effectively token sales, a structure unique to crypto. Part of the “investment” may come in the form of the project’s own tokens, priced privately between the two parties. Another common structure is token swaps, where Project A exchanges tokens with Project B and both announce a “strategic investment” in each other.
This approach is especially common among large blockchains and foundations such as TON, Solana, Polygon, or Near. They allocate their own tokens to new projects under ecosystem funds or strategic investment programs.
In many cases, these tokens are locked for one to four years and cannot be sold immediately. As a result, a project may announce tens of millions of dollars raised while actual cash accounts for only 10 to 20 percent.
A notable example is Monad. Even though its public sale on Coinbase raised a total of 187.5 million USD, it is still classified as fundraising, just under a different label. This becomes concerning when a project raises private rounds at low valuations and later conducts public sales at much higher valuations. In practice, retail investors are buying tokens at inflated prices to complete the final fundraising stage. In simple terms, ICOs or public sales are often the most exit-friendly rounds for early investors and project teams.
1.3 Contributing Resources Instead of Money
“Strategic resources” can replace cash. These include server infrastructure, software licenses, or dedicated support teams. In media reports and social posts, these deals are still labeled as “X million USD invested,” even though the project never receives actual cash.
A clear example occurred in November 2024, when Google Cloud announced a 10 million USD investment into BNB Chain projects through its Most Valuable Builder program. In reality, this amount consisted of cloud credits, meaning free access to Google Cloud services over a certain period. Each project received up to 350,000 USD in credits over two years.
1.4 Interest-Bearing Debt
Not all “capital raised” is equity. In many cases, a significant portion of fundraising is actually debt. These loans must be repaid with interest regardless of business performance. During bull markets, this risk is often overlooked. In bear markets, debt obligations can quickly suffocate a company, even if it once claimed to have raised hundreds of millions.
A classic example is Core Scientific, one of the largest Bitcoin mining companies in the United States. Before 2022, Core Scientific borrowed hundreds of millions of dollars at high interest rates to expand its ASIC mining fleet. In the media, these were often described as successful fundraising rounds, giving the impression of strong financial backing.
When Bitcoin prices collapsed in 2022, mining revenue could no longer cover electricity costs, operating expenses, and especially interest payments. In December 2022, Core Scientific filed for bankruptcy with over 1 billion USD in debt. The company later restructured and was acquired by CoreWeave, pivoting from Bitcoin mining to AI infrastructure.
2. How Crypto Fundraising Differs from Traditional Markets?
Traditional markets have also exposed many cases of inflated fundraising numbers. The difference is that when scandals emerge, legal systems can intervene. Investors can sue, seek compensation, and founders can face prosecution.
Crypto is different. Built on decentralization and permissionless access, anyone can participate without oversight. There is no mandatory regulator, no required audits, and tokens can list within months rather than years as in traditional IPOs. This openness is what makes crypto attractive. A retail investor in Vietnam can invest in a US-based project with just a few clicks.
But too much freedom also creates room for abuse.
Without oversight, projects can publish whatever numbers they want. Without audits, whitepaper figures can be inflated at will. Tokens list quickly, allowing insiders to exit before users realize the product delivers little value. When projects collapse and founders disappear, retail investors often have nowhere to turn.
Airdrops illustrate this perfectly. Originally designed to reward early users who genuinely contributed to a project, airdrops gained popularity through examples like Uniswap. Over time, they became tools to inflate metrics. Projects promise free tokens, users farm points, growth numbers look impressive, investors fund the project, and once incentives disappear, everything reverts to its true value.
3. What Can Retail Investors Do?
Crypto projects rarely disclose the detailed structure of their fundraising. They issue press releases, post on X, and attach logos of famous funds. There are no audited reports, and no way to know how much is cash, how much is tokens, or what conditions apply.
For retail investors, the most practical solution is to change the approach. Instead of trying to verify whether fundraising numbers are real, focus on what can be independently verified.
3.1 Evaluate Products and People
Is the product actually working? Many projects raise tens of millions while only offering demos or testnets. The best approach is to try the product yourself. Does it work smoothly? Do features perform as advertised?
Then look at real users. Tools like DeFiLlama, Dune Analytics, and DappRadar help track active wallets, transaction volume, and on-chain revenue. These metrics can still be manipulated through bots or wash trading, so they should be treated as reference points rather than absolute truth.
Evaluate the team. Who are the founders? What have they built before? Did previous projects succeed or fail? Are identities public or anonymous? An anonymous team is not automatically a scam, but combined with other red flags, it warrants caution.
Also observe how the team interacts with the community. Do they answer technical questions seriously, or focus only on marketing promises? How do they respond during incidents? Serious teams communicate transparently, even during bad news, while short-term teams avoid criticism or delete negative comments.
3.2 Check Whether Funds Are Actually Involved
Many projects like to display logos of major funds to build credibility. In reality, some may have received only small checks, advisory roles, or informal relationships.
The simplest check is to visit the fund’s official website or X account. Major funds like a16z, Paradigm, Sequoia, and YZi Labs typically publish their portfolios. The more you verify, the clearer the picture becomes.
That said, this method is not definitive. Some funds or angel investors do not publicly disclose investments, and even large funds may stay silent for strategic reasons.
3.3 Monitor Post-Fundraising Activity
After fundraising announcements, real projects continue building. They hire, ship features, expand ecosystems, and form partnerships. Real money gets spent, and spending patterns reflect actual capability.
If after a big raise you only see aggressive marketing, countdowns to token launches, and then silence, that is a clear red flag. Even worse are projects that rush to TGE immediately after announcing large funding. These often aim to create FOMO and provide exit liquidity for insiders.
A practical recommendation is to monitor GitHub and technical update channels. Are there frequent code commits? Regular product updates? Or only announcements about partnerships and events? Serious projects maintain steady development regardless of fundraising headlines.
4. Conclusion
Hundreds of millions of dollars raised in crypto do not tell the full story of a project’s financial health. Behind flashy announcements may lie inflated or misleading figures. Raising large amounts does not guarantee sufficient runway for long-term development, nor does it ensure value for users or retail investors. Investors should avoid placing blind trust in fundraising numbers.
Disclaimer:This content does not constitute investment, tax, legal, financial, or accounting advice. MEXC provides this information for educational purposes only. Always do your own research, understand the risks, and invest responsibly.
