Bloomberg Article: The 'Princeton Mafia' is Fueling the Cryptocurrency Treasury Rush

Original Title: Inside the Princeton Network Fueling a Crypto Treasury Boom

Original Source: Bloomberg

Original Translation: Zhou, ChainCatcher

Key cryptocurrency players, including Mike Novogratz from Galaxy Digital and Dan Morehead from Pantera Capital, have been repeatedly seen in transaction after transaction, shaping one of the boldest bets of the new crypto era: the digital asset treasury trend.

These publicly traded companies (about 85 this year and counting) have raised billions from all types of investors from the U.S. to Gulf nations to Asia. Their strategy involves using Wall Street tactics to fundraise, accumulate crypto assets, and then repeat the process. Week after week, many of the same names keep appearing in some of the industry's most audacious trades.

Novogratz, Morehead, and Joe Lubin (Ethereum co-founder) are not only industry veterans but also central figures in this high-stakes digital asset push, just as a broader treasury trend begins to unsettle—and their connection dates back to their undergraduate days at Princeton in the 1980s.

In those days, Novogratz and Lubin were college roommates, with Novogratz being an East Coast wrestler and Lubin a squash player with a knack for computer science. Morehead, an engineering major and a football player, lived nearby. These connections shaped decades of crypto dealmaking.

While tight-knit networks are common in traditional finance, the crypto industry is built on promises of decentralization and anonymity. Yet, these familiar faces tell a different story, a dynamic that led them to be dubbed the "Princeton Mafia" by Fortune magazine.

Novogratz leads Galaxy, a digital asset financial services giant; Morehead is the CEO of Pantera Capital, one of the earliest crypto investment firms; Lubin is a co-founder of Ethereum, runs the blockchain software company Consensys, and serves as chairman of the public trading Ethereum treasury firm SharpLink.

With momentum building and key figures at the helm, the question becomes whether DAT (Digital Asset Treasury) can continue to deliver returns or if they are built on shaky ground.

"If you have a good story and a good storyteller, you can bring more capital to Solana or Ethereum faster than ever before," Novogratz said in an interview.

Galaxy and Pantera are among the top ten DAT investors and lenders. This tight-knit orbit extends to trading counterparties, with about a third of DAT trades involving the same handful of boutique investment banks. Overall, according to PitchBook data, the top ten DAT investors have accounted for approximately 14% of treasury trades in the past six months. Even with conservative estimates that exclude the biggest players, such as Michael Saylor's Strategy Inc. blockbuster moves, DAT has attracted a record $15.4 billion in new capital this year.

For these three Princeton alumni, none of this was premeditated. But something perpetuated since their undergraduate days, a shared appetite for risk and a belief in a "Wall Street that can be rebuilt faster and lighter," has persisted. Each has carved their own path in finance or tech. Then their paths began to converge again. For over a decade, they exchanged ideas and investments—swapping notes, backing projects, and occasionally co-investing.

In May, Lubin helped launch the Ethereum treasury company SharpLink Gaming, with Pantera and Galaxy among the investors. Lubin mentioned that discussions about DAT only happened after investors signaled interest. Pantera and Galaxy are also both investors in the Ethereum treasury company BitMine Immersion. "We are friends, but we don't see each other every day," Lubin said in a recent interview. "But when we do, we have a lot to talk about."

Their companies also compete. In September, Pantera backed a new Solana-focused DAT called Helius. Just days ago, Galaxy helped launch a competitor named Forward Industries. These were not coordinated efforts. "It just so happens that our firms both launched Solana DATs within a week," Morehead said. Novogratz echoed a similar sentiment: "We should probably pick up the phone and talk about this, but we don't."

Their paths kept intersecting, sometimes purely by chance. When Morehead discovered Novogratz had moved next door in Tokyo, the overlap felt almost surreal. Their alma mater now also reflects this shared legacy. In 2022, Novogratz, Lubin, Morehead, and Briger jointly funded Princeton University's new center—a Blockchain-powered Decentralization of Power Center.

When the U.S. Securities and Exchange Commission (SEC) signaled it wouldn't consider most tokens as securities, the door was opened—a move that paved the way for a strategy pioneered by Saylor: raise funds, buy into crypto assets, ride the price appreciation, and repeat. "We did start to become more creative, more aggressive in our thinking," Lubin said. "And it makes sense."

This approach paid off handsomely until it didn't. In June, SharpLink, backed by Lubin, saw a 72% single-day price plunge after filing for a stock offering. BitMine dropped 40% after a similar filing. These sell-offs served as a reminder that in the high-wire act of crypto moonshots, the inherent volatility can be nerve-wracking.

“SharpLink is for the very long term,” Lubin said. “Our current strategy is to continue funding with favorable terms, continue buying Ether and holding it long-term, and continue to seek out and deploy Ether in scenarios where the risk-adjusted return is favorable.”

This week, over $1.5 billion in leveraged positions in the crypto market were liquidated, with no clear trigger.

These players are still expanding their reach. Galaxy often plays the role of a service provider—staking tokens, designing DeFi strategies, and providing team advisory. Pantera has over $1 billion in risk exposure on DAT and has backed over 15 companies. "DAT is indeed providing a pathway for a new type of investor to enter the blockchain market," Morehead said.

Novogratz doesn't believe the market has peaked yet. "I don’t think all DAT companies are going to be successful, but if they can reach critical mass—boost the native token's yield and build an ecosystem—I think they’re good for crypto in general. These are the public companies that are going to last.”

Original Article link