It aims to make a ten-thousand-fold profit from ByteDance and has now invested in AI.
When a user on the X platform asked Peter Steinberger, the founder of the recently popular OpenClaw, about "the best advice for 20-year-olds," he straightforwardly said, "Don't waste your time on cryptocurrencies."
To some extent, this statement represents a choice in the shift of the times. According to the latest report from the OECD, by 2025, global venture capital (VC) investment in artificial intelligence companies will account for more than half (61%, $258.7 billion) of all venture capital ($427.1 billion), which is twice the share in 2022 (30%).
The bigwigs in the cryptocurrency circle have clearly felt the pressure. Not long ago, foreign media reported that Paradigm, a top cryptocurrency venture capital firm, announced the expansion of its investment scope to include artificial intelligence, robotics, and other cutting-edge technologies. The firm plans to raise a new fund of up to $1.5 billion under this broader investment strategy. Matt Huang, co-founder and managing partner of Paradigm, is involved in the promotion of the relevant strategy.
Paradigm is one of the VCs with the largest amount of cash on hand today. According to the latest regulatory filings, the firm currently manages assets worth $12.7 billion. There was a time when Paradigm made the entire industry believe that blockchain would change the world, but in just a few years, the cycle has reversed. Paradigm has suffered repeated setbacks in the cryptocurrency track, with a significantly reduced frequency of investments and a lack of representative projects.
As the AI wave surges forward, Paradigm's shift at this time can hardly be considered forward-looking. As a former leader, whether it can successfully follow the new narrative of the era has become an open question.
The Founder Achieved Over 10,000 Times Return on Investment in ByteDance
Paradigm once dominated the cryptocurrency circle.
It was founded in 2018 and is headquartered in San Francisco, California. It was co-founded by Matt Huang and Charles Noyes, who graduated from the Massachusetts Institute of Technology, and Fred Ehrsam, who graduated from Duke University. The first fund with a scale of $400 million attracted the endowment funds of Harvard, Stanford, and Yale. This was the first time a cryptocurrency investment firm had received recognition from top endowment funds.
During the bear market, Paradigm perfectly bottom-fished Bitcoin and captured large unicorns such as FTX, Fireblocks, and BlockFi. In 2021, Paradigm announced the establishment of a $2.5 billion cryptocurrency investment fund to bet on the next generation of leading cryptocurrency projects. It is reported that during the fundraising phase, investors rushed to pour in funds, doubling the final fundraising amount of the fund compared to the initial target.
The resumes of the three founders themselves represent a typical "genius elite" narrative. When founding Paradigm, Fred and Matt were only 29 years old; and Charles was even younger when he joined, and is now only 26 years old.
Matt comes from an academic family. His father, Qifu Huang, is a well-known scholar in the field of finance. What is even more talked about by the outside world is that he invested in ByteDance at a valuation of about $200 - $300 million when he was 24 years old. At that time, this was just his largest personal investment, and according to ByteDance's current valuation, the return on this investment has already exceeded 10,000 times, becoming the most legendary deal in his career.
Fred has a typical Wall Street - cryptocurrency migration path. After graduating from college, he worked as a trader at Goldman Sachs. After getting in touch with Bitcoin in 2011, he transformed into an angel investor and then co-founded Coinbase with Brian Armstrong. In 2017, he left the daily management position at Coinbase but still retained about 6% of the shares, and the value of this part of the equity was extremely considerable during the bull market.
As for Charles, he has a more technical geeky color. He focused on blockchain research during his teenage years and was once noticed by Intel and the US national security agencies for his relevant achievements. After studying at the Massachusetts Institute of Technology for one year, he chose to leave school early and engage in the cryptocurrency industry. Before joining Paradigm, he had already served as the investment director of Pantera Capital.
It is reported that Paradigm's asset management scale is currently about $12.7 billion. This scale has long kept it in the first echelon of global cryptocurrency native investment firms.
The Giant Falls into a Slump
The good times didn't last long.
In 2021, Sam Bankman-Fried, known as the "King of Cryptocurrencies," announced his resignation as the president of FTX, and the company filed for bankruptcy. The final result was not basically settled until 2024. SBF was sentenced to 25 years in prison for stealing $8 billion from the customers of the FTX cryptocurrency trading platform, and he was also fined $11 billion personally.
Matt admitted that this was the worst thing in Paradigm's history. When reflecting on it, he frankly said, "I actually don't know what the correct conclusion about SBF is. He is a unique and different individual, but so are many great founders. Another problem is that we did discover the core problem that eventually became an issue, which is the related - party nature between the market - maker and the exchange. We actually delved into this during the due diligence and were ultimately deceived. So, I think when a founder is willing to do such a thing, venture capital is very difficult because the entire ecosystem relies on trust, and it's hard to conduct due diligence on lies. We had no reason to think he was lying."
The collapse of trust became the deepest wound in this cycle, and the most intuitive signal was reflected in the changes in senior management. In September 2023, CFO Nathan Apsel and General Counsel Reena Jashnani - Slusarz left; in October, co - founder Fred Ehrsam announced his resignation from the management position and became a general partner. Since then, the team structure has continued to be adjusted.
Judging from the public investment portfolio and trading frequency, Paradigm's investment pace has significantly slowed down in the past two or three years, and it also lacks "representative works" that can form an industry consensus. At the same time, some high - return projects have not appeared on its investment list.
Take the prediction market track, which has attracted high attention from the capital market in recent years, as an example. Paradigm invested in the prediction market project Veil as early as January 2019, but the project ceased operations in less than a year. The shadow of the early setback prevented it from participating in Polymarket in subsequent rounds of financing.
It wasn't until January this year that Polymarket announced the completion of a $150 million financing at a valuation of $1.2 billion. Paradigm then heavily bet on its competitor Kalshi. First, it led a $185 million financing round at a valuation of $2 billion in June this year, and then participated in two rounds of financing at valuations of $5 billion and $11 billion within half a year. This is also the project with the highest valuation that Paradigm has ever invested in.
Last year, the trend in the cryptocurrency industry further shifted towards stablecoins and payment infrastructure. Paradigm entered the field again and launched the high - performance Layer 1 public chain Tempo for payment scenarios with the Internet payment giant Stripe, with Matt Huang serving as the CEO. Subsequently, Tempo acquired Ithaca, and its entire team was incorporated.
After experiencing the trust crisis and the trough of the cycle, the outside world believes that Tempo's payment battle may become a crucial battle for Paradigm to prove its product and research capabilities again.
A Batch of Cryptocurrency Players Transfer to AI
Paradigm's current bet on AI seems like a foreshadowing that was laid before the end of the carnival.
A rather dramatic example is that the aforementioned FTX invested $500 million to lead the investment in the AI startup Anthropic in 2021 and once held 13.56% of its shares. As subsequent rounds of financing progressed, this proportion was diluted to 7.84%.
That was still a stage when the imagination of AI had not truly exploded. Just half a year later, FTX collapsed; on the other hand, OpenAI launched ChatGPT, and the global narrative suddenly shifted. The world almost entered the "Age of Exploration" of AI overnight. Anthropic, on the other hand, has continuously refreshed industry expectations with its Claude series of products and gradually grown into one of the most representative star companies in the AI era.
The change in capital flow is more intuitive than the narrative. In the past four years, the number of venture capital deals in the cryptocurrency industry has been declining year by year: in 2022, there were 1,639 financing deals in the primary cryptocurrency market; by 2025, it had dropped to 829. The proportion of early - stage financing has also fallen from over 50% to below 35%. The supply of projects is shrinking, and investors' enthusiasm is cooling down. "It's hard to find good projects" has become a consensus.
Some institutions have chosen to turn around early. Pantera Capital, an established cryptocurrency fund founded in 2013, has quietly included AI investment in the terms of its new fund. The $2.2 billion cryptocurrency fund under A16z was once one of the largest of its kind in the world, but its overall investment portfolio has long covered AI and infrastructure.
The transfer of individual investors is more direct. Yu Jianing, the co - founder and CEO of Cobo, who is an OG in the cryptocurrency circle, was once one of the representatives of the early Bitcoin mining industry. Du Jun was even more decisive - in April 2025, he announced that ABCDE would stop investing in new projects, and the fundraising plan for the second - phase fund was also suspended. He also said bluntly, "Many projects are extremely short - sighted and only think about getting listed as soon as possible. This is not a game I'm willing to participate in." Subsequently, he founded Vernal Group and officially switched to the AI track. More fund managers have chosen to liquidate their funds and leave: some have engaged in large - model entrepreneurship, some have turned to AI infrastructure, some have returned to traditional technology VCs, and some have quietly faded out of the public eye.
Paradigm may be the most "decent" defector among them. Although it insists that "there is a large overlap between cryptocurrency and AI," everyone knows that the overlap doesn't require a separate fundraising of $1.5 billion.
As early as 2023, Paradigm deleted all Web3 - related statements on its official website, which sparked industry discussions. Subsequently, co - founder Matt Huang came out to respond, with a tone that was thought - provoking: "The development of AI is so interesting that it can't be ignored." In February this year, Paradigm and OpenAI jointly released EVMbench to test AI's ability to identify smart contract vulnerabilities. It can be seen that Paradigm's entry into AI is not a spur - of - the - moment decision.
On one side is the frenzy, and on the other side is the cold winter. In "The Garden of Forking Paths," Jorge Luis Borges said, "Time is constantly branching, leading to countless futures." Perhaps for Paradigm and others, the shift from cryptocurrency to AI is just capital opening another inevitable door in the maze of time.
This article is from the WeChat official account "Dongshisi Tiao Capital" (ID: DsstCapital), written by Wei Xianghui and published by 36Kr with authorization.