Arthur Hayes’ Maelstrom Fund in LP Backlash After 44% Drawdown

A senior director at Arthur Hayes’ Maelstrom investment firm revealed that a $100,000 investment in a crypto venture capital fund had fallen to $56,000 over four years.

This decline occurred despite Bitcoin doubling in value and seed-stage tokens increasing by up to 75 times over the same period.

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Fund Underperformance Sparks Transparency Debate

The revelation, made by Akshat, Maelstrom’s investment director, has intensified scrutiny of crypto VC fund performance and fee structures.

Akshat shared his experience as a limited partner in an early-stage token fund. His investment from four years ago has lost 44% of its value, despite the ongoing bull market for digital assets. Akshat reported that the fund charged 3% annual management fees and 30% performance fees (carry).

He compared the fund’s results to benchmarks. Over the course of four years, Bitcoin’s value doubled, and seed deals delivered returns ranging from 20 to 75 times the initial investment.

Akshat described this outcome as significant underperformance, attributing it to the growth of large venture funds chasing a limited set of successful projects in the crypto sector.

The post featured a capital account statement dated September 2025, which showed an opening balance of $54,287.84 and an ending balance of $56,054.01. The year-to-date net rate of return was reported as negative 6.08%.

When asked about the difference between the original investment and the reported balance, Akshat explained the fund had switched from since-inception reporting to period-over-period performance.

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He argued this change can obscure sustained underperformance.

Market Observers Point to Pantera Connection

After Akshat’s disclosure, social media users speculated that the fund in question was Pantera Capital’s Early-Stage Token Fund. Pantera, a recognized crypto-focused venture firm, invests in numerous early-stage blockchain projects.

The firm’s full-spectrum approach encompasses private tokens and early-stage protocols, offering faster public market liquidity compared to traditional equity investments.

However, Pantera has also posted notable wins. In November 2024, the firm announced that its Bitcoin Fund had delivered returns 1,000 times over more than a decade.

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Recent communications to limited partners have highlighted a move towards tokens with strong revenues, which have outperformed riskier assets.

This controversy reveals the challenges crypto VCs face. The National Venture Capital Association and PitchBook reported that 76% of completed acquisitions in early 2025 occurred before a Series B, highlighting the challenges of early-stage exits.

The report also pointed to continued investor-friendly deal-making, reflecting growing selectivity and risk aversion among VCs.

Maelstrom Pivots to Private Equity and Cash-Flowing Businesses

The limited partner response followed weeks after Hayes and Akshat announced Maelstrom Equity Fund I, a new buyout private equity fund.

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This new strategy shifts away from speculative tokens and toward profitable, off-chain infrastructure companies. According to an October announcement on X, Maelstrom now targets “picks and shovels” businesses in crypto.

The aim is to offer clean exits for founders and create acquisition-ready firms for financial institutions, such as Robinhood and Charles Schwab.

Maelstrom, managed by the family office of Arthur Hayes, BitMEX co-founder, emphasizes long-term investing across venture, liquid, private equity, and public markets. Akshat identified three key issues the new fund aims to address.

• Founders of profitable, off-chain firms often lack clean exit options and can face multi-year lockups with strategic acquirers.
• Traditional finance entrants struggle to source complete, ready-to-acquire businesses.
• Institutional allocators such as pension funds want to invest large sums into crypto but find poor risk-adjusted returns from big venture funds.

The shift toward private equity highlights limited partners’ dissatisfaction with standard crypto VC funds, especially when fees and carry reduce capital during downturns.

Maelstrom’s experience highlights the potential conflict between fund scale and performance. Whether the move to cash-flowing private equity will produce better results is uncertain, but heightened scrutiny of VC structures suggests a defining moment for the sector.