Crypto Fundraise Turns Controversial After Startup Self-Invests, Issues Apology
- P2P.me used foundation funds to bet on its own raise, then apologized after the backlash.
- The startup spent $20,500 on Polymarket trades and reported about $14,700 in profit.
- MetaDAO offered refunds as the raise closed at $5.2M, below the targeted $6M milestone.
P2P.me’s latest capital raise drew scrutiny after the startup disclosed that its team traded on Polymarket markets tied to its own fundraising outcome. The company later apologized, saying the move was an inappropriate attempt to signal conviction and that it damaged trust.
The India-based firm said the trades were placed 10 days before its public raise went live on MetaDAO, a Solana-based fundraising and governance platform. P2P.me stated that only a $3 million oral commitment from Multicoin Capital existed at the time, with no signed term sheets or guaranteed allocations.
Trades Tied to a $6 Million Target
According to the company, the positions were opened under an account named “P2P Team” using capital from the project’s foundation account. The trades wagered that the project would reach its $6 million fundraising milestone, while other positions referenced a far larger $140 million commitment threshold.
However, the Crypto Fundraise ultimately closed at $5.2 million, below the $6 million target. Even so, the trades produced a gain as the team had structured positions that paid out on that milestone-related outcome.
P2P.me said an initial outlay of $20,500 returned $35,212, generating roughly $14,700 in profit. In a separate public explanation, the company said the profit was less than $15,000, but admitted the optics carried broader consequences.
In its apology, P2P.me said the decision created confusion and hurt trust. The company added that it should have let its product, mission, and execution speak without using prediction market bets.
Backers and Platform Partners Respond
The episode also caught key stakeholders off guard. Per reports, two people familiar with the matter acknowledged some of P2P.me’s biggest backers were unaware the startup had traded on its own raise.
Before launching the public offering on MetaDAO, P2P.me had already raised $2 million in a seed round led by Coinbase Ventures and Multicoin Capital. A Coinbase Ventures spokesperson said the firm had not allocated capital beyond that initial round.
MetaDAO co-founder Prohp3t said the platform would have urged P2P.me to avoid Polymarket had it known about the plan. Prohp3t described the conduct as a guerrilla marketing stunt that went too far, while still saying it was unsupported.
Consequently, to protect investors, MetaDAO offered refunds to participants who wanted to exit before the public raise ended on Tuesday. A spokesperson said refund requests totaled $20,000 out of $6.7 million in committed funds.
Related: New Hampshire Launches $100M Bitcoin-Backed Bond With Moody’s Rating
Rules Tighten as Scrutiny Grows
The controversy arrived just days after Polymarket updated its rules on March 25 to prohibit insider trading. The platform said it rejects trading based on stolen information, illegal tips, or authority sufficient to influence an event’s outcome.
P2P.me, however, said it did not believe it was trading on a done deal, as the fundraising result remained uncertain when the bets were placed. Still, the company said it would implement a formal internal policy on prediction market trading.
The Crypto Fundraise has also landed amid broader political attention on prediction markets. Representatives Adrian Smith and Nikki Budzinski introduced the PREDICT Act this week to bar lawmakers and senior officials from such trading.
Similarly, a separate bill targeting political insider trading was introduced a day later. At the same time, Polymarket recently partnered with Palantir to build a surveillance system designed to detect manipulation.
For P2P.me, the numbers were modest, but the fallout was not. A small profit of about $14,700 turned a routine raise into a public test of trust, disclosure, and market conduct.
