China’s $500M Ethereum DAT Plan Shelved Amid Crypto Slump

A consortium of China’s most influential cryptocurrency figures has quietly shelved a $500 million initiative to create an Ethereum Digital Asset Treasury (DAT) firm, marking a significant retreat by institutional investors during the current market downturn. The project was spearheaded by Huobi founder Leon Li Lin, HashKey Group chairman and CEO Xiao Feng, Meitu co-founder Mike Cai Wensheng, and Fenbushi Capital founder Bo Shen. These industry heavyweights had planned to raise half a billion dollars to build a dedicated DAT company focused exclusively on investing in ether, the world’s second-largest cryptocurrency.

Despite securing $110 million in capital commitments from prominent investors including HongShan Capital Group and Yunfeng Financial Group, the group decided to suspend the ambitious plan after market conditions worsened significantly. According to the South China Morning Post report, the project’s backers had already opted to delay the DAT effort to avoid potential investor losses, reflecting growing concerns about the sustainability of current market conditions.

The decision to shelve the Ethereum DAT initiative comes against a backdrop of severe market deterioration across the cryptocurrency sector. Bitcoin has suffered through a steep six-week decline after reaching an all-time high of $126,272.76 on October 6, even briefly plunging below $90,000. Ethereum has navigated a similar trajectory, trading under $3,000 at the time of the decision, creating unfavorable conditions for launching a major digital asset investment vehicle.

Leon Li Lin, who sold Huobi in 2022 and now chairs Hong Kong-listed Sinohope Technology Holdings, offered a blunt assessment of current conditions during an investor event in Hong Kong. Li stated that ‘the market wasn’t doing very well’ and that the broader ‘macro outlook isn’t very clear either,’ highlighting the uncertainty that prompted the suspension. The group had intended to acquire a Nasdaq-listed shell company to launch the ether DAT vehicle, according to a Bloomberg report last month, but that strategy is now on hold indefinitely as the founders wait for market sentiment to stabilize.

Meitu’s Mike Cai Wensheng indicated that the group may revisit the plan once conditions improve, suggesting the suspension represents a tactical pause rather than a complete abandonment of the Ethereum DAT concept. This cautious approach reflects the broader sentiment among institutional investors who are reassessing their crypto exposure amid the ongoing market slump.

The shelved Chinese initiative stands in stark contrast to developments in the United States, where DAT firms have surged in popularity amid rising crypto prices over the past year. The most prominent example is Nasdaq-listed Strategy, which holds nearly 650,000 bitcoin, demonstrating the successful implementation of the DAT model in American markets. However, regulators in Hong Kong have not embraced the DAT model, creating additional headwinds for the Chinese consortium’s plans.

In the United States, several firms have moved aggressively into Ethereum despite the challenging market conditions. BitMine, for instance, pivoted earlier this year from its original role as a Bitcoin mining company to becoming the world’s largest corporate holder of ETH. The company is now chaired by Wall Street veteran and Fundstrat co-founder Tom Lee, who recently stated that Ethereum is beginning its own ‘supercycle,’ similar to Bitcoin’s explosive growth trajectory over the last eight years.

However, the current market conditions continue to pressure digital asset-focused stocks, including BitMine’s BMNR, which sank over 45% in the past month alone. This parallel decline in both cryptocurrency prices and related equities underscores the systemic nature of the current downturn and validates the Chinese consortium’s decision to suspend their Ethereum DAT ambitions until more favorable conditions emerge.