China’s influential crypto leaders have silently put on hold a major plan to establish a $500 million Ethereum Digital Asset Treasury (DAT), ceasing the project after several months of strategizing amidst a deteriorating situation in global crypto markets.

The initiative, primarily driven by Huobi’s founder Leon Li Lin, HashKey Group’s chairman and CEO Xiao Feng, Meitu’s co-founder Mike Cai Wensheng, and Fenbushi Capital’s founder Bo Shen, aimed to raise substantial funds to create a DAT company focused on ether, the second-largest cryptocurrency worldwide.

High-Profile Ether Plan Shelved

Despite accumulating $110 million in capital commitments, the group opted to halt the plan following the deterioration of market conditions, as reported by the South China Morning Post. The DAT model has grown increasingly fashionable in the United States, where the rising crypto prices of the past year garnered heightened investor interest. A notable example is the Nasdaq-listed Strategy, known for holding nearly 650,000 bitcoin.

Conversely, Hong Kong regulators have shown reluctance to accept the DAT model.

The news comes alongside Bitcoin’s severe six-week drop, which followed its peak of $126,272.76 on October 6, temporarily dipping below $90,000. Ethereum also faced a similar trajectory, trading below $3,000 at the time of this report.

In light of this, Li provided a candid evaluation of the current scenario. Having sold Huobi in 2022, he now chairs Sinohope Technology Holdings, a crypto wealth-management firm linked to Huobi. He informed investors at an event in Hong Kong this month that “the market wasn’t doing very well” and remarked that the broader “macro outlook isn’t very clear either.”

According to a video leak from the event, the project’s backers had chosen to postpone the DAT venture to circumvent potential investor losses, with investors reportedly from HongShan Capital Group and Yunfeng Financial Group.

DATs Under Pressure

In the U.S., various firms have aggressively embraced Ethereum. For instance, BitMine transformed from a Bitcoin mining firm to the largest corporate ETH holder globally earlier this year. Led by Wall Street veteran and Fundstrat co-founder Tom Lee, the firm has suggested that Ethereum is initiating its own “supercycle,” reminiscent of Bitcoin’s unprecedented upward trajectory over the last eight years. However, current market conditions continue to inflict pressure on digital asset-focused stocks, including Bitmine. In fact, BMNR plummeted over 45% in the past month alone.

Cai indicated at the same event that the group might consider reviving their plans when conditions are more favorable. Originally, the strategy involved acquiring a Nasdaq-listed shell company to launch the ether DAT vehicle, but that initiative remains on ice as the founders await a stabilization in market sentiment.