The crypto industry is experiencing a familiar and dizzying phenomenon: the rapid enrichment of startup founders — once again — before their companies have even proven long-term viability.
From Silicon Valley to Dubai and Singapore, early-stage crypto founders are cashing out millions of dollars in “secondary sales”, selling portions of their personal token holdings or equity to eager investors chasing the next breakout in decentralized finance, artificial intelligence, or blockchain infrastructure.
According to venture capital insiders, these deals often amount to $5 million to $15 million per founder, sometimes occurring only months after launch — well before a product achieves traction or revenue.
The boom echoes the frenzied energy of the 2017 initial coin offering (ICO) era and the 2021 NFT and DeFi bubble, but with a new twist: investors and founders are now operating under the guise of legitimacy, armed with venture capital backing and carefully structured tokenomics.
The Return of Easy Money
After a difficult 2022–2023 “crypto winter,” markets have roared back in 2025, fueled by rising institutional participation, new Bitcoin ETF inflows, and a surge of AI-integrated blockchain projects.
This resurgence has created a new generation of overnight millionaires. Founders of early-stage projects — some barely past their seed funding — are quietly negotiating secondary token sales that allow them to convert paper wealth into real cash.
These transactions are not illegal. In fact, they’ve become normalized in the startup ecosystem. Venture funds and exchanges are often the buyers, betting that early access to a project’s tokens will yield huge returns once public trading begins.
But critics warn that the pace and scale of these deals are unsustainable. “We’re seeing founders getting liquidity before their companies have product-market fit, before they’ve built a community, before they’ve proven anything,” said one prominent crypto investor. “It’s deja vu from the ICO days.”
How Secondary Sales Work
In traditional venture capital, early founders typically have to wait years before realizing gains through an IPO or acquisition. But in crypto, the creation of digital tokens offers a shortcut.
Here’s how it works:
- A startup issues its native token, representing a stake or utility in its network.
- Early investors and founders receive a share of those tokens, often with vesting periods.
- As hype builds, new investors — or sometimes hedge funds and exchanges — offer to buy tokens directly from founders or insiders at a private price.
- Founders sell a portion of their holdings for millions, while the token remains illiquid or unlisted publicly.
In essence, founders are monetizing future hype, leveraging paper valuations long before their startups reach maturity.
A New Breed of Venture Capitalism
What’s changed from the 2017 era is who’s funding it. Large, respected firms — once cautious of crypto — are now driving early-stage liquidity. Venture funds, private token desks, and family offices see early token access as a way to outperform traditional equity investments.
One investor in Dubai put it bluntly: “You can’t 100x a SaaS startup anymore, but you can still 100x a token.”
This logic has drawn huge capital inflows back into the crypto ecosystem. In 2025 alone, more than $30 billion in private blockchain deals have been recorded globally, according to data from market intelligence firms. Much of that is tied to early liquidity events — effectively rewarding founders upfront.
Risk and Reward: The Bubble Debate
The trend has sparked heated debate within the industry. Supporters argue that early liquidity helps founders de-risk their personal finances, allowing them to stay focused on building for the long term.
“It’s not unreasonable for founders to sell a small percentage,” said a venture partner at a major Web3 fund. “If they’ve spent years building in the bear market, a few million in secondary sales gives them freedom and stability.”
Critics, however, say this behavior distorts incentives and encourages short-termism. Founders who have already made fortunes before their projects succeed may lack motivation to endure the difficult phases of scaling a real business.
“We’re seeing inflated valuations and overfunded teams chasing hype instead of innovation,” said an analyst from London-based crypto research firm TokenInsight. “History tells us this ends the same way every time — with retail investors left holding the bag.”
Echoes of the Past
The parallels with previous crypto manias are unmistakable. In 2017, thousands of projects raised billions in ICOs with little more than whitepapers and promises. Most vanished within two years.
In 2021, NFTs became the new frontier — digital art selling for millions, before collapsing amid market correction. Now, in 2025, the hype has shifted toward AI-integrated blockchains, real-world asset tokenization, and decentralized compute platforms.
The difference? This time, the players are more sophisticated, the capital deeper, and the mechanisms more legally compliant. But the underlying psychology — speculation and greed — remains the same.
The Billion-Dollar Founder Phenomenon
Several of crypto’s most talked-about new founders have already reached billionaire status on paper, thanks to aggressive token valuations and early liquidity events.
Examples include:
- A decentralized AI data network founder who sold $12 million in tokens before the network even launched.
- The creator of a blockchain-based cloud storage firm who raised $50 million, then sold personal holdings for $8 million within six months.
- A team behind a “Web3 gaming protocol” that raised $70 million and saw insiders sell a combined $25 million in secondary sales within a year.
“These are founders in their twenties cashing out like they’ve built Amazon,” one investor said. “It’s wild.”
Regulators Watching Closely
Regulators in the U.S., Europe, and Asia have taken notice. The U.S. Securities and Exchange Commission (SEC) is reviewing several early token transactions for potential violations of securities laws, particularly those involving unregistered secondary sales to unaccredited investors.
Meanwhile, Dubai’s Virtual Assets Regulatory Authority (VARA) and Singapore’s MAS have issued new guidelines requiring clearer disclosure on founder token allocations and secondary sales.
Still, enforcement remains uneven — and the market, flush with speculative capital, is outpacing regulation once again.
Conclusion: Wealth Before Proof
The crypto ecosystem’s ability to generate vast fortunes out of future promises is both its greatest strength and its deepest flaw. Founders are indeed becoming very rich, very fast — but history shows that such rapid wealth creation rarely ends smoothly.
For every visionary who turns early liquidity into sustainable innovation, dozens may disappear with investor cash when the cycle turns.
The current frenzy reflects a simple truth: crypto is still driven more by belief than by fundamentals. And as long as belief can be monetized, there will always be another generation of founders ready to cash in — before the dream becomes reality.
