From the end of 2021 into mid-2022, the money faucet for crypto projects was on full blast. Startups raised $10.7 billion in the first quarter of 2022 alone, according to Crunchbase. But that stream turned to a trickle in 2023, as crypto founders raised approximately $6.7 billion across all four quarters.
A regulatory crackdown from the U.S. federal government, a crypto bear market, and a down year for venture capital writ large all contributed to a parched funding landscape, but the money faucet wasn't completely turned off.
Here are the most eye-popping fundraises of 2023, from some of the largest on record to one of the most dubious.
The largest
As 2023 came to a close, Wormhole, a project that lets developers across separate blockchains communicate with each other, announced one of the year’s largest raises, according to Crunchbase’s Web3 tracker.
Finalizing its split from the market maker and VC Jump Crypto, the team behind Wormhole said that it had raised $225 million at a $2.5 billion valuation. Participants included venture capital stalwarts like Brevan Howard, Coinbase Ventures, and, of course, Jump Trading, of which Jump Crypto is an offshoot. In an interview with Fortune, Wormhole executives said that the deal was entirely for yet-to-be-released tokens, rather than equity in the company.
This was the first confirmation that Wormhole, perhaps best known for a $320 million hack of its protocol in February 2022, plans to launch a token. Shortly thereafter, LayerZero, a direct competitor and another between-blockchains messaging protocol, announced that it, too, would launch its own token.
LayerZero had also announced its own eye-popping raise of $120 million at $3 billion earlier in 2023. If 2022 saw flashy startups like Yuga Labs and OpenSea secure hundreds of millions in capital, 2023 saw some of the most boring back-end companies raise the most money.
The most dystopian
Infrastructure was arguably the crypto buzzword of the year, but there was still room for out-of-left-field, eye-catching startups to rake in the cash, the most dystopian of which proved to be Worldcoin, which wants to scan your eyeballs to prove you’re human.
In May, Tools for Humanity, Worldcoin’s developer, announced that it had raised $115 million in a Series C funding round led by Blockchain Capital, with a16z crypto and Bain Capital as participants. Backed by Sam Altman, the CEO of ChatGPT-creator OpenAI, Worldcoin aims to solve the very problem Altman is arguably creating: a world overrun by AI.
Originally, the project was conceived as a form of universal basic income—but distributed as cryptocurrency—because as AI takes more and more of our jobs, we'll still need money. Every human, in theory, should receive an allotment of “Worldcoin” to buy food, pay our AI butlers, etc. But to distribute the cryptocurrency, we need a way to distinguish between humans and robots. Enter the orb!
Now synonymous with Worldcoin, the metallic silver orb (to which Fortune subjected itself) scans a human’s eyeballs and maintains a record of the iris scans. Although it released its cryptocurrency in July, Tools for Humanity has, for the short term, positioned its tech as a form of login authentication, most recently integrating with Reddit, Telegram, and Minecraft.
The most bittersweet
In November, Blockchain.com, which maintains a crypto wallet and operates an exchange, raised a hearty $110 million in a Series E round led by Kingsway Capital. The only catch? The money was raised at less than a $7 billion valuation, less than half of what investors valued the firm in March 2022. (When reached by Fortune, a spokesperson for Blockchain.com declined to comment on the valuation Bloomberg reported.)
The down round was simultaneously heartening—Crypto Winter is over!—and disappointing—a more than 50% cut in valuation, yeesh. And it wasn’t the only firm to see such a decrease in 2023. Coatue Management cut its stake in OpenSea to below $1.4 billion, according to The Information. Tiger Global similarly marked down its stake in the NFT marketplace by 94% and also marked down its investment in Bored Ape Yacht Club-creator Yuga Labs by 69%, per Bloomberg.
Perhaps Blockchain.com’s most recent raise is a cipher. Crypto naysayers may see it as more evidence of the industry's bubble bursting in 2023. Others may view it as a win for founders strapped for cash.
The most out-of-nowhere
Crypto isn’t AI, and eight-figure raises are atypical, especially for a company’s first round—and especially during a crypto bear market.
So when Auradine announced that it had raised $81 million with no product, no customers, and just a pitch deck, it was, um, a bit surprising. Moreover, when it unveiled its capital injection, the founders wouldn’t describe exactly what its product was.
That’s why Fortune dug into how exactly this out-of-nowhere company, which eventually revealed that it was building a new Bitcoin mining chip, secured such a large initial raise. The answer? Experienced (but not flashy) founders, a focus on hardware, and potentially superior tech beyond what’s available in the U.S. market.
The sketchiest
Crypto isn’t crypto without its (alleged) grifters. And perhaps one of the weirdest fundraises of the year was a $10 million bet on a company called CryptoGPT, a mishmash of two different buzzwords that, when combined, form a Frankenstein of tech hype.
In April, CryptoGPT announced a Series A, a round led by DWF Labs that valued the startup at $250 million. And what did CryptoGPT purport to do? In yet another buzz-laden description, its website read: “CryptoGPT is the ZK Layer-2 that lets you own the monetisation of your AI data.” Huh?
Since then, CryptoGPT has rebranded to LayerAI. Fortune reached out to both the startup as well as its backer, DWF Labs. A partner at DWF said they haven't had contact with LayerAI since April. And LayerAI's staff never responded to Fortune's inquiry about what, exactly, the word cloud of a company does.
