Consulting · 2024

Crypto Startup — Investment Due Diligence

An investing firm that had acquired a stake in a crypto startup engaged us to perform independent due diligence on their investment. The startup had conducted an ICO and subsequent funding rounds, and the investor needed an objective assessment of whether the founders were managing funds appropriately, whether the token economy was mathematically viable long-term, and whether the company's reported traction matched on-chain reality. Our investigation combined blockchain forensic analysis, financial modeling, and game-theoretic evaluation to deliver a comprehensive viability report.

Blockchain ForensicsOn-Chain AnalysisFinancial ModelingMonte Carlo SimulationToken Economy AuditDue Diligence

The Challenge

An investment firm had put significant capital into a crypto startup following its ICO. As the project progressed, the investor grew concerned about the opacity of fund management and questioned whether the founders' spending patterns aligned with their stated roadmap. They needed an independent third party to trace all fund movements since the ICO, verify whether founders were diverting or mismanaging funds, and mathematically model the token economy to determine if the business was fundamentally viable or heading toward collapse.

Our Approach

Our investigation followed a three-track approach. First, we performed comprehensive on-chain fund tracing — mapping every transaction from the ICO wallet through all intermediate addresses to final destinations, identifying exchange deposits, OTC transactions, DeFi interactions, and any transfers to personal wallets. Second, we built mathematical models of the token economy incorporating supply schedules, vesting cliffs, market liquidity, holder distribution, and projected usage scenarios to stress-test whether the economic model could sustain itself under various market conditions. Third, we cross-referenced on-chain data with the startup's public communications, roadmap milestones, and financial disclosures to assess founder transparency and operational integrity. The final deliverable was a comprehensive due diligence report with clear findings on fund management practices, economic viability projections, and risk assessment with recommendations for the investor.

Outcomes

Complete fund flow mapped from ICO through all wallets and transactions

Token economy mathematically modeled with Monte Carlo simulations across market scenarios

Founder fund management practices verified with full transparency report

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