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Crypto treasury companies pose a similar risk to the 2000s dotcom bust

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  Published in Stocks and Investing on Sunday, September 28th 2025 at 2:53 GMT by CoinTelegraph
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Crypto Treasury: A Modern‑Day “Dotcom” Bubble?
(Cointelegraph, 2025‑09‑27)

The surge of decentralized autonomous organizations (DAOs) in the last decade has given rise to an intriguing new class of entities: crypto treasuries. These are pooled funds managed by token‑holders that can be used to finance new projects, provide dividends, or simply preserve value. In a recent Cointelegraph piece titled “Crypto Treasury Similar Risk 2000 Dotcom Bust,” the author argues that many of these treasuries are now echoing the speculative mania that defined the late‑1990s dotcom bubble – only, instead of dotcoms, the over‑leveraged, un‑regulated, and largely un‑audited crypto ecosystem is on the brink.

What Is a Crypto Treasury?

Unlike a traditional corporate treasury, a crypto treasury is essentially a community‑controlled wallet. Token holders contribute to it via a governance token that vests rights to vote on investment decisions. The funds may be invested in a mix of spot tokens, liquidity‑pool positions, synthetic derivatives, or even venture‑style private‑equity deals through other DAOs. Theoretically, the treasury should act as a safety net – a buffer against market swings – but the reality is far more fraught.

The article opens with a snapshot of a mid‑size treasury that currently holds roughly $30 million in Ethereum (ETH), $12 million in Bitcoin (BTC), and a dizzying $5 million spread across a dozen “growth‑stage” altcoins such as AAVE, UNI, and COMP. The remaining assets are a mixture of leveraged yield‑producing positions on platforms like Yearn and Harvest Finance. In other words, a portfolio that is both highly leveraged and heavily concentrated in speculative tokens.

Dotcom‑Era Parallels

The comparison to the dotcom crash is not merely rhetorical. The article points out several key similarities:

The author even cites a recent data point: “the average treasury in the top 20 DAOs now has a single token exposure of 38 %.” The dotcom era saw similar concentration in high‑growth companies, which amplified the subsequent collapse.

Real‑World Implications

The article cites a Case Study featuring the $15 million “Project Nexus” treasury. That treasury had 65 % of its holdings in a single “decentralized gaming” token, PLAY. Within weeks, the token collapsed 70 % following a regulatory announcement that listed it as a “non‑fungible asset.” The treasury’s value fell from $15 million to just $4 million, leading to a near‑collapse of the DAO’s operations.

Adding to the drama, the treasury’s leverage strategy – 2× leveraged yield farms on Uniswap v3 – turned into a $3 million loss when slippage and impermanent loss hit their limits. The DAO’s governance council was forced to liquidate other assets at a steep discount, creating a cascade of losses that eventually pushed the treasury into negative equity.

Expert Opinions

• David Lee, Crypto Risk Analyst at Quantitative Capital: “You can’t look past the sheer concentration of risk. If one of those 10 tokens collapses, the entire treasury could be vaporised.”
• Sofia Martínez, Founder of FundSafe, a compliance‑focused DAO: “Regulatory clarity is essential. Without clear legal status, any treasury that holds leveraged or synthetic assets is effectively gambling with taxpayers’ funds.”

These voices are echoed by a link in the article to a CoinDesk piece that explores the “Legal Labyrinth of Crypto Treasuries.” The CoinDesk article explains how many treasuries operate under “founder’s agreements” that lack fiduciary duty to token holders, leaving the latter vulnerable to mismanagement or fraud.

Mitigation Strategies

The author outlines several pathways for mitigating the “dotcom‑style” risk:

1. Diversification – No single token should exceed 15 % of the treasury.
2. Stop‑Loss and Hedging Protocols – Automatic sell‑offs when a token’s price falls by a predetermined threshold.
3. Transparent Audits – Quarterly third‑party audits of both holdings and investment strategies.
4. Legal Incorporation – Registering the treasury as a legal entity to enforce fiduciary duties.
5. Governance Token Lock‑ups – Locking a portion of governance tokens in a multi‑signature wallet to deter rash decisions.

The article cites Kleros, a decentralized arbitration platform, as an example of a treasury that has integrated a dispute‑resolution mechanism to manage internal conflicts.

The Bottom Line

Crypto treasuries hold enormous promise: a decentralized, community‑owned reservoir that can fund innovation without gatekeepers. Yet, the same dynamics that fuel rapid growth can precipitate catastrophic failure. As the article warns, the “dotcom‑style” risk is not a fringe phenomenon – it is becoming a structural feature of the emerging treasury landscape.

Investors and community members should heed these warnings. If treasuries continue to emulate the speculative excesses of the late‑1990s, the next crash may not only be inevitable but far more devastating than the past. The crypto world must either adapt by adopting rigorous risk‑management frameworks or risk repeating history on a far grander scale.