Dragonfly Capital Raises $650M Crypto Fund Despite Market Downturn

Dragonfly Capital’s successful $650 million fundraise arrives as the broader cryptocurrency market contends with declining token prices and weakened investor enthusiasm. According to Fortune, this new vehicle comes at a time when the crypto venture sector is experiencing a pronounced slowdown, with deal activity declining and firms facing challenges in raising additional capital. The fund represents a $150 million increase over Dragonfly’s third fund, which deployed $500 million into startups including prediction market Polymarket, Middle Eastern exchange Rain, and synthetic dollar protocol Ethena.

Co-founder Haseeb Qureshi framed the firm’s approach as one of stark transparency in a noisy industry. “We talk out loud and we say what we think,” Qureshi commented. “In a space that is just completely flooded with bulls**t and with fakers and self-promoters, I think that has actually been a superpower.” This capital infusion is earmarked to continue Dragonfly’s trajectory of identifying and backing foundational projects during a period many investors are retreating.

Dragonfly’s operations have persisted through a series of seismic market disruptions, demonstrating a tested operational resilience. The firm’s portfolio and strategy have weathered the collapse of the Terra Luna ecosystem, the catastrophic bankruptcy of exchange giant FTX, and a strategic pivot away from China following local regulatory crackdowns. Its investments have spanned key infrastructure, including Layer 1 blockchain Avalanche (AVAX) and financial services firm Amber Group.

However, the path has not been without significant regulatory challenges. In July 2025, the firm faced direct scrutiny from the U.S. Department of Justice (DOJ). During a break in the trial of Tornado Cash developer Roman Storm—later convicted of operating an unlicensed money transmission—prosecutor Nathan Rehn informed District Judge Katherine Polk Failla of the Southern District of New York that criminal charges were being considered against Dragonfly employees, including general partner Tom Schmidt. The potential charges related to the firm’s 2020 investment in the privacy protocol Tornado Cash.

Co-founder Haseeb Qureshi clarified that Dragonfly had fully cooperated with the government investigation, which began in 2023, and stated the firm would defend itself if charges were filed. Ultimately, the Justice Department backtracked, and no charges were filed against Schmidt. This episode underscores the complex and evolving regulatory landscape that venture firms must navigate alongside market volatility.

The closure of this substantial fund sends a clear signal about Dragonfly Capital’s long-term conviction and its ability to secure institutional backing even during a ‘crypto winter.’ The capital is specifically intended for early-stage investments, suggesting the firm sees the current downturn as a fertile period for building and investing at more attractive valuations, before a potential market recovery.

The move stands in contrast to the broader trend of declining venture activity reported by Fortune. By doubling down now, Dragonfly is positioning itself as a lead provider of growth capital to the next generation of crypto startups, betting that the foundational technologies and services—from decentralized finance to new blockchain infrastructures—will outlast cyclical price declines. The firm’s journey, marked by navigating the collapses of Terra Luna (LUNA) and FTX (FTT) and a high-profile DOJ investigation, now continues with a significant war chest aimed at the market’s future builders.