The high-profile founder of an $80 million crypto fund vanished in China, prompting investors to vote for its closure—just as he resurfaced.

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The Mysterious Disappearance of David Gan: A Deep Dive into Inception Capital’s Turbulent Summer

Last May, a cryptic email from David Gan, the managing director of Inception Capital, sent shockwaves through the investor community. In the message, Gan disclosed that his father, a retired high-ranking Chinese government official, was under investigation. He informed his investors that he would be traveling to China, but shortly after, he went silent. This sudden disappearance raised eyebrows and concerns among the limited partners (LPs) who had invested in his blockchain-focused venture firm.

A Promising Start

David Gan’s rise in the venture capital world has been nothing short of meteoric. In 2019, at just 28 years old, he was named to Forbes’ 30 Under 30 Asia list for his role as managing director of Huobi Labs, one of the largest cryptocurrency platforms globally. His expertise in incubating and investing in blockchain projects positioned him as a formidable player in the crypto space. In 2021, he launched his first venture fund, raising $50 million with backing from notable figures like Bill Ackman and Alan Howard, as well as prominent organizations such as Y Combinator and Galaxy Digital. By early 2024, Inception Capital had successfully closed a second fund, bringing its total assets under management to nearly $100 million.

The Investors’ Trust

Gan’s investors had placed their trust in him for good reason. His background in finance, coupled with his experience in the rapidly evolving tech landscape, made him an attractive choice for those looking to invest in early-stage crypto ventures. His initial pitch for Inception Capital, originally named OP Crypto, was to bridge the gap between the U.S. and Asia in the crypto space. He believed that the U.S. could benefit from Asia’s resources, particularly in user acquisition and publicity. This vision resonated with family offices and high-net-worth individuals seeking diversified exposure to the burgeoning crypto market.

The Disappearance and Its Aftermath

However, Gan’s sudden disappearance during the summer of 2023 sent alarm bells ringing among his investors. Following his email, many LPs found themselves in the dark, with only limited communication from Gan’s legal representatives. This lack of transparency prompted some investors to vote for a controlled wind-down of the fund, a decision that would allow Inception to manage its existing investments without calling for the remaining 25% of capital from its first fund.

In late June, Gan resurfaced, apologizing for his absence and agreeing to relinquish certain key responsibilities within the firm. He stated that during his time away, the team had done an "incredible job" of serving their LPs and portfolio companies. Despite his assurances, the incident highlighted the inherent risks associated with investing in the volatile crypto industry, particularly in firms with foreign ties.

The Investigation

The investigation involving Gan’s father, a former deputy director of the Hubei Provincial Public Security Department, added another layer of complexity to the situation. According to a public notice from the Central Commission for Discipline Inspection, Gan’s father was under investigation for "serious disciplinary and legal violations." While there was no indication that the investigation was related to crypto, the implications of such a high-profile case raised concerns about the potential fallout for Gan and his firm.

The Future of Inception Capital

As Inception Capital navigates this turbulent period, the future of the firm remains uncertain. A snapshot of the firm’s website from April revealed a downsizing in its team, with four of its eight employees departing. However, Gan has expressed optimism about the firm’s prospects, stating that they plan to propose a strategy to their LPs that would allow continued investment through the remaining capital.

In a statement shared with Fortune, Gan emphasized his commitment to adding value to the ecosystem of investors and builders. He reassured LPs that Inception is thriving and that he has been actively involved in day-to-day operations for months. As the firm works to regain the trust of its investors, the coming months will be crucial in determining whether Inception Capital can weather the storm and emerge stronger from this challenging chapter.

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