Is Praxis's $500 million financing 'promise' a capital manipulation game for GEM Digital?

As leaders such as Vitalik and Balaji push for the rise of network countries, more and more builders are joining and opening up this narrative space. Recently, Praxis, which claims to be the world's first network country project, announced that it has received up to $525 million in financing, which has been widely followed, but at the same time, the investment scandals of GEM Digital, a participating party, have also cast a shadow over this huge financing.

Announces Over $500 Million Funding Again for Building a Technologically Advanced City

On October 16, Praxis announced that it has raised $525 million to accelerate the speed and quality of transactions with governments and landowners in building a cutting-edge technology city.

This round of investors includes Arch Lending, GEM Digital, Manifold Trading, as well as Farcaster CEO Dan Romero, Dragonfly partner 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 had raised $4.2 million in seed funding in 2021, with participation from Bedrock Capital, Winklevoss Capital, Alumni Ventures, and others, as well as $15 million in Series A funding from Paradigm, Alameda, Three Arrows Capital, Robot Ventures, and others in 2022.

Praxis was founded in 2021 and is led by 28-year-old co-founder Dryden Brown. According to its official website, Praxis is an internet-based local alliance aimed at accelerating technological progress and revitalizing Western civilization. It already has over 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 new city for three reasons: (1) to unleash technological and scientific potential by reducing regulatory barriers in talent-rich accelerator areas, driving rapid development in fields such as artificial intelligence, cryptocurrency, biotechnology, and energy; (2) to create a more heroic and beautiful way of life through cultural and institutional development; (3) to showcase the possibility of building great cities in the 21st century to the world.

According to The Wall Street Journal, Praxis has not yet determined the specific city location, and the Latin American and Mediterranean regions may be chosen. The final decision will be made in the first quarter of 2025. Dryden Brown revealed that the initial plan for the project covers about 1000 acres of land and can accommodate 10,000 people.

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

GEM Digital, as the financing leader, has repeatedly committed fraud with false financing information.

Despite the increasing prevalence of the concept of national networks, the substantial financing of Praxis is surprising, and the participation of GEM Digital has raised considerable doubts about this investment.

“Seeing institutions like BlackRock committed to Crypto Assets, we designed a tokenization-based mechanism for encryption and used Real World Assets (RWA) for large-scale project financing, and cooperated with Global Emerging Markets, the largest new city development project in the Middle East. This financing is also the first application of this withdrawal mechanism.” Praxis stated in the financing statement. This financing mechanism usually refers to the borrower being able to withdraw funds gradually based on project progress or needs within a specific time period, rather than receiving all funds at once.

In fact, according to The Wall Street Journal, GEM Digital CEO Jonathan Collins revealed that the company contributed $500 million. In return, Praxis needs to provide tokens representing the future real estate development ownership to GEM, which means that only Praxis can obtain this fund after the token is launched. The remaining funds will also be released in stages according to milestone events, such as obtaining local government permits, purchasing construction land, tokenizing land ownership, and starting construction, etc.

In fact, this performance-based investment is a common practice for GEM Digital. According to previous reports from PANews and Chain Catcher, 'investment commitments' are a common trick for GEM, with dozens of unknown encryption projects announcing financing news in the form of investment commitments, but in reality, GEM signs so-called huge investment protocols with the garbage project parties to create Favourable Information in the market, deceive the media, collaborate in dumping for profit, and share the proceeds. There are even encryption projects that disclose that the investment funds from GEM Digital will not be directly transferred, but will be used to fill the investment after the Tokens are sold for profit.

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

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

Original Text Link