Behind GEM Digital's "Trenches" Cast: A Hidden and Bizarre Smashing Game

Original Author: Gu Yu & Biscuits

At a time when the encryption market is sluggish and venture capital institutions have slowed down their investment frequency, a new venture capital institution has attracted a lot of attention from the industry with its high-frequency investment speed and exaggerated investment amount. It is GEM Digital.

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List of encryption projects invested by GEM institutions this year

Just today, GEM Digital once again announced that it has signed an investment commitment worth US$35 million with Travel Coin, a blockchain tourism eco-project. The token has declined linearly by more than 95% since its release, and the current diluted total market capitalization is still less than $5 million after today's rise. Why would GEM Digital invest $35 million in a project of such market value?

This phenomenon does not exist in isolation. This has been the case for many projects invested by GEM Digital before. For example, on May 18, KaJ Labs announced that it had received an investment commitment of US$400 million from GEM Digital Limited, but the total market value of the project token LITHO diluted was only US$4.7 million. In addition, projects such as Peculium and Energi have a similar phenomenon.

At the same time, most of the projects invested by GEM Digital are not well-known in the industry, and there are no obvious bright spots in business models and other aspects. Moreover, almost all of GEM Digital's investments are made independently, and it has never invested in cooperation with well-known venture capital institutions, and its behavior style is quite strange.

So, is GEM Digital a fool with a lot of money? Why spend a lot of money to invest in projects whose market value is much lower than the investment amount? The trick lies in the word "investment commitment".

Compared with most financing news, investment institutions directly announce investment to the project side, GEM Digital basically announces investment commitments in the news. Literally, an investment commitment means that the project party promises to invest a certain amount in the project party, but it does not necessarily make the actual contribution. In a GEM Digital investment news, the project party once stated that the investment is not a direct investment, but will be based on milestones and performance to ensure that the use of funds is fully optimized.

However, according to Chain Catcher's interview with the person in charge of an encryption project, the so-called "investment commitment" has many jaw-dropping inside stories. The person in charge of the project said that GEM Digital had contacted the project by email and promised to invest 50 million US dollars, but when signing the investment contract, she found that the agency stated in the contract that it would not directly pay the money, but would transfer tokens After the sale, the investment fund will be filled by the profits obtained.

That is to say, GEM Digital’s investment agreement is more like a cooperation deal and sharing agreement. The two parties sign a so-called huge investment agreement to create good news in the market, and then cooperate to make profits and share. Judging from the token performance of GEM Digital’s past investment projects, the situation is basically the same. It is the users who ultimately pay for the investment funds.

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The trend of LITHO tokens in the past 2 months, the investment time of GEM Digital is May 19

"This is actually using the media to manipulate the community," said the person in charge of the aforementioned project. "I feel that the projects I cooperate with them will be miserable." For GEM Digital's investment news, most of them are published on Yahoo Finance, PR Newswire and other platforms , but it has also been reported by mainstream encryption media such as Coindesk and Cointelgraph. Because the actual inside story is too weird and bizarre, it can be said that most of the encryption media industry has been kept in the dark.

Regarding this method, GEM Digital is not actually original, but comes from its parent company, Global Emerging Markets (hereinafter referred to as GEM). According to official information, this is an alternative investment group worth 3.4 billion US dollars, which manages a series of funds focused on global investment. Investment vehicle for emerging markets, has completed over 500 transactions in 72 countries, with offices in Paris, New York and the Bahamas.

Specifically, the company’s investment types include minority equity investment and control acquisition, involving many traditional fields such as environmental technology, pharmaceuticals, agriculture, energy, real estate development, etc., but the invested companies are not well-known, and there are also many Chinese companies names, including China Timber Resources Group Ltd (China Timber Resources Group), China PetroTech (Shenzhou Petroleum Technology), Heng Xin China Holdings Limited (Hengxin China Holdings). Chip China has been forcibly delisted many years ago.

Of course, GEM’s investment style is also generous. Most of the investments range from tens of millions to hundreds of millions of dollars. the word.

To sum up, GEM institutions are often willing to invest in projects with low popularity and mediocre business development, and mainly adopt the unconventional and low-threshold investment method of "investment commitment", making use of their long-term publicity to create popularity, and those who need good news. The project parties have reached a tacit conspiracy to jointly create a hidden and bizarre capital game, which requires the attention and vigilance of all parties in the encryption industry.