Is Praxis’ $500 million financing “commitment” a capital manipulation game by GEM Digital?

Original title: "GEM Digital recreates capital manipulation game? Praxis received over $500 million in financing "promise", but the funds have not yet arrived"

Original author: Nancy, PANews

As leaders such as Vitalik and Balaji push for the network state, more and more builders are beginning to join and open up the growth space of this narrative. Recently, Praxis, which claims to be the world's first network state project, announced that it has received up to $525 million in financing, which has attracted much attention. However, at the same time, the previous investment shady dealings of GEM Digital, a participating investor, have also put a question mark on this huge amount of financing.

Once again announced that it has received over $500 million in financing to build a technological frontier city

On October 16, Praxis announced that it had received $525 million in financing, which will be used to speed up the speed and quality of transactions with governments and landowners to build a technological frontier city.

Investors in this round include Arch Lending, GEM Digital, Manifold Trading, Farcaster CEO Dan Romero, Dragonfly partners Tom Schmidt, Rob Hadick and Anirudh Pai, ETHGlobal CEO Kartik Talwar, Helius Labs CEO Mert, Worldcoin co-founder Max Novendstern and Flipside Crypto data scientist Will Price.

Prior to this, Praxis also received $4.2 million in seed round financing in 2021, the year of its establishment, with Bedrock Capital, Winklevoss Capita and Alumni Ventures participating, and completed a $15 million Series A financing in 2022 with investments from Paradigm, Alameda, Three Arrows Capital and Robot Ventures.

Praxis was founded in 2021 and is led by 28-year-old co-founder Dryden Brown. According to the official website, Praxis is an Internet-native alliance that aims to accelerate technological progress and revitalize Western civilization. It has more than 14,000 Praxians in 84 countries, and the companies founded by these members are worth more than $400 billion.

One of Praxis' core goals is to build a brand new city for three reasons: (1) Unleashing the potential of technology and science: by building cities in talent-intensive acceleration zones, regulatory barriers are reduced, thereby promoting rapid development in areas such as artificial intelligence, cryptocurrency, biotechnology, and energy; (2) Creating a more heroic and beautiful lifestyle: through cultural and institutional construction; (3) Showing the world the possibility of building great cities in the 21st century.

According to the Wall Street Journal, Praxis has not yet determined the specific city site. Latin America and the Mediterranean region may be selected, and the final decision will be made in the first quarter of 2025. Dryden Brown revealed that the project initially plans to cover about 1,000 acres of land and can accommodate 10,000 people.

In addition, Zaha Hadid Architects has provided Praxis with a conceptual plan for urban construction, combining futurism with classical aesthetics and scalable urban planning. The development work will be led by David Weinreb, former CEO of Howard Hughes Corporation.

GEM Digital is the leader of financing and has repeatedly used false financing information to defraud

Although the concept of cyber-state is becoming more and more popular, Praxis's large-scale financing is surprising, and the participation of GEM Digital has also made this investment questionable.

"Seeing that institutions such as BlackRock are committed to cryptocurrencies, we designed a crypto-native mechanism to use tokenized real-world assets (RWA) to finance large projects and cooperate with Global Emerging Markets, the largest new urban development project in the Middle East. This financing is also the first application of this withdrawal mechanism." Praxis said in the financing statement. This financing mechanism usually means that the borrower can gradually withdraw funds according to the progress or needs of the project within a specific period of time, rather than obtaining all the funds at once.

In fact, according to the Wall Street Journal, GEM Digital CEO Jonathan Collins disclosed that the company contributed $500 million of the funds. In return, Praxis needs to provide GEM with tokens representing the ownership of future real estate developments, which means that only Praxis can get the money after the tokens are launched. The remaining funds will also be distributed in stages according to milestone events, such as obtaining local government permits, purchasing construction land, tokenizing land ownership, and starting construction.

In fact, this performance-based investment is a common method used by GEM Digital. According to previous reports by PANews and Chain Catcher, "investment commitment" is a common trick of GEM. Dozens of unknown crypto projects have announced financing news in the form of investment commitments, but in fact GEM has signed so-called huge investment agreements with junk project parties, creating market good news to deceive the media, and jointly smashing the market to make profits and share them. And there are even crypto projects that have disclosed that GEM Digital's investment funds will not be paid directly, but will be supplemented by the profits after the tokens are sold.

In addition, the Wall Street Journal also reported that Arch Lending will provide the remaining $25 million in funds, so the total investment of these two institutions has reached $525 million. Does this mean that the remaining investors are just in name only and do not contribute money?

From this point of view, Praxis may be another capital manipulation game of GEM Digital.

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