Interview with the Chairman of Cypher Capital The Cryptocurrency Cycle is an External Factor, Cultivating Inner Strength is the Way to Success

Interview: flowie, ChainCatcher

Guest: BillQian, Chairman of Cypher Capital

BillQian currently holds multiple positions. After leaving his role as the head of investment and financing at Binance last year, he joined Phoenix, the largest Web3 holding company in the Middle East, and became the Chief Investment Officer of Cypher Capital, Phoenix’s ecological investment platform, and the exchange In addition, he also serves as a director of the TON Foundation.

When asked about the change in his investment style after the change in his identity, BillQian first emphasized one thing that has remained unchanged. Whether at JD, Binance, or Phoenix/Cypher, his philosophy has always been: “I am an entrepreneur happened to be an investor”. In other words, creating value is always “more valuable” than seeking value.

However, based on this philosophy, the change lies in his sensitivity to scenarios and traffic, developed through his traditional Web1/Web2 investment experience. During his time at Binance, he focused more on early-stage ecological investments and large-scale mergers and acquisitions. After joining Phoenix/Cypher, BillQian has practiced the strategy of “build and invest”, which requires a lot of time to build multiple businesses with moats, “doing everything from Bitcoin mining, incubating compliant exchanges, to early-stage investments”.

Starting from Bitcoin mining, Phoenix now owns the world’s largest Bitcoin mining farm, Phoenix Mining. And now, CypherCapital, the diversified strategy Web3 fund under Phoenix, covers a wide range of businesses, including mining, nodes, umbrella funds, direct investments in projects in the primary and secondary markets, and compliant exchanges. Cypher has currently invested in well-known projects such as Sui/Mysten Labs, SeiNetwork, and zkLianGuaiss. BillQian stated that if a suitable direction is identified but there are no ready-made founders, Cypher will also form a team and personally get involved. For example, the compliant exchange, incubated by Cypher, is also about to go live.

In the “fertile land” of the Middle East, where regulation and innovation are relatively balanced, how does Cypher “forge good relationships” and carry out diversified businesses? What are the obvious characteristics of the Web3 investment and entrepreneurial atmosphere in the Middle East? As an investor who has gone through the complete cycle of Web1/Web2, how does BillQian view the current stage of development of the crypto industry, as well as the trend of recent applications for Bitcoin spot ETFs and the entry of Web2 forces such as LianGuaiyLianGuail issuing stablecoins against the trend? BillQian recently shared his insights on these questions in a deep interview with ChainCatcher.

“An entrepreneur happened to be an investor”

1. ChainCatcher: Can you briefly introduce how you first got involved with Web3?

Bill: I started my career in a US dollar PE fund called Zhixin Capital, focusing on technology and medical investments. Later, with the rise of CVC in the Chinese region, I worked at JD for six years, responsible for global technology/fin-tech investments at JD. By 2020, the growth of Web2 itself had slowed down relatively, and coincidentally, I joined Binance, becoming the head of investment and financing, in charge of financing, M&A, and Binance Labs.

2. ChainCatcher: Why did you join a Middle Eastern investment fund, Cypher Capital, last year? How is the team developing now?

Bill: Our entire group is called Phoenix, the largest Web3 holding company in the Middle East. Phoenix’s core business is Phoenix Mining, the world’s largest Bitcoin mining farm, which has 7% of the global Bitcoin network’s computing power. We also operate a joint venture subsidiary with ADQ, a sovereign wealth fund in Abu Dhabi, with a capitalization of $650 million. I also serve as the Chief Investment Officer of, Phoenix’s exchange, and the Chairman of Cypher Capital, its ecosystem investment platform.

Currently, I also serve as a director of the TON Foundation, the public blockchain of Telegram, which has an active user base of 800 million. Perhaps because I was involved in Web1/Web2 before joining Web3, I am particularly concerned about traffic and scenarios. Therefore, the Telegram ecosystem has given me more opportunities to think about how Web3 can have applications with large-scale scenarios.

3. ChainCatcher: After joining Cypher Capital, what are the main focuses of your personal business? Did your style of managing funds or investment logic change from being the global head of fundraising at Binance to the Chairman of Cypher Capital?

Bill: Currently, I allocate 50% of my energy to the management and operation of Cypher and 50% to the innovation, incubation, and capital operation of subsidiaries under the Phoenix group. Whether it’s, Binance, or Phoenix/Cypher, my philosophy has always remained the same: “I am an entrepreneur happened to be an investor.” Creating value will always be more valuable than seeking value, and this is also what I learned from my mentor, Mr. Zhang Lei.

However, we must also understand that things change, and the global environment, business, and people change. When I was at, my main focus was on minority stakes and acquisitions in the mobile Internet/Web2 ecosystem in China and Southeast Asia. At Binance, my attention was divided between early-stage ecological investments and large-scale M&A (hoping to use the “buy and grow” method to accurately solve strategic problems in important mergers and acquisitions). Now at Phoenix/Cypher, we are involved in Bitcoin mining, incubating compliant exchanges, and early-stage investments, following a “build and invest” approach.

Cypher’s diverse strategies, building multiple moats

4. ChainCatcher: Cypher Capital has a wide range of businesses, including mining, nodes, parent funds, direct investments in primary and secondary markets. What is the development status of different business sectors and how are they connected?

Bill: Mining is where we make significant profits in this industry, nodes generate revenue from top assets, the parent fund is for building relationships with investors from important ecosystems worldwide, and combined with direct investments, we can establish an all-weather approach within the industry.

Therefore, we consider ourselves as an Evergreen Multi Strategy Firm. As I mentioned earlier, as entrepreneurs happened to be investors, we spend a lot of time building businesses with moats: from Phoenix Mining, the world’s largest mining farm, to compliant exchange, to the one-and-a-half-year-old Cypher Capital, and we will continue to incubate more businesses.

5. ChainCatcher: From past investment projects, it seems that Cypher Capital has focused mostly on infrastructure and gaming. With the slowdown in the crypto investment pace this year, have you made any adjustments to your investment strategy and what areas are you focusing on?

Bill: First of all, I believe that the biggest issue in the industry this year is not the bear market. In fact, BTC has risen over 75% this year, from $16,630 to over $29,000, which is the best performance among all asset classes globally.

So what is the problem? I think it’s the breakthrough in scenarios. Until today, the entire crypto industry is still a Fintech 2.0: BTC is like gold 2.0, and Ethereum is a decentralized financial cloud 2.0, on which various stablecoins, exchanges, lending platforms, etc. have been built. Essentially, Web3 is still a decentralized, Web2 fintech vertical industry. Other areas like NFTs, gaming, socialfi, etc. have yet to fully prove themselves.

Our strategy is different from most institutions. We believe that investors are essentially innovative followers, while founders are the leaders. We focus more on bottom-up judgments rather than top-down allocations.

Of course, we hope and believe that Web3 in the future will far surpass Fintech 2.0, so as long as we encounter suitable directions and founders, we will invest and incubate. If we find a suitable direction but no ready-made founder, we will build our own team. For example, the compliant exchange, which will be launched in the near future, was built and incubated over the past year.

6. ChainCatcher: It seems that AI has become a trend for crypto funds like LianGuairadigm this year. What are Cypher Capital’s thoughts on the combination of AI and Web3? Do you have a clear strategic layout?

Bill: I discussed this issue with Vitalik back in March this year, and he also believed that “CryptoX AI” would be a major theme.

Our understanding is that in the past 300 years, the world has been driven by two major forces: one is the improvement of productivity, relying on “AL,” which I call “Artificial Labor,” which is the industrial revolution, creating a large number of machine labor for this world. The second is innovation in factor allocation, which involves various combinations and reorganizations of capitalism, socialism, and state capitalism.

In the current world, we also have two major driving forces: AI and factor allocation, which is the value of Web3, the internet’s reconstruction of the value distribution network in business. Recently, we co-invested with institutions like Coinbase in Cymbal. It is a Web3 portal browser founded by a Web2 veteran (Hutu ex-CTO/KPCB ex-GP, a top-tier VC in Silicon Valley), and it is the world’s first product that applies artificial intelligence to big models in the Web3 scene.

7. ChainCatcher: So far, the largest investment amount you have made is $150 million in the Web3 game publisher Fenix Games, while most other investments are below $10 million. Why did you make a large investment in Fenix Games and what is the investment logic?

Bill: We have two types of investments. One is incubation for major industries. For example, our mining business started in 2015 with a single investment of 650 million US dollars in Abu Dhabi, which was the first in the entire Middle East. The other is the compliant exchange business starting in 2022, with the first investment amounting to 250 million US dollars.

But for VC-related businesses, our investment amounts are actually not large, and we never compete for leading positions. There are two reasons for this: financial returns and ecosystem building. The logic behind this is straightforward: for major industries within our own capabilities, we prefer to play a leading role and build them ourselves; for founders in other fields, we prefer to play a supporting role and establish good relationships.

Therefore, the amount of investment and the allocation of resources depend on the assessment of the odds and probabilities of the matter, as well as whether it falls within the capabilities of others or our own.

8. ChainCatcher: Cypher Capital invested in Mysten Labs’ Layer 1 Sui, which launched its mainnet in the first half of the year. However, Sui caused controversy by choosing direct exchange public offering/IEO instead of airdrops, and its token price also fell below expectations. How should investors view the listing controversy and the performance in the secondary market of Sui?

Bill: As the only institution in the Middle East that invested in Mysten, we have always supported the ecosystem development of Sui. In the context of tightening regulations in the United States, the decisions of many projects in the United States cannot be understood solely from a commercial perspective. We believe that under the leadership of the long-term oriented team, Sui will have a long-term, compound growth trend.

Why has the Middle East become a “fertile land” for crypto?

9. ChainCatcher: What are the characteristics of the Middle East’s Web3/Crypto institutional investor market? What is its current market position?

Bill: The Middle East market is where many Web3 teams come to, and it is also the market where LPs invest in various funds globally. Whether it is Abu Dhabi, Riyadh, or Qatar’s sovereign funds, they have deployed a large number of funds worldwide and become LPs. However, we all know that in the entire technology investment field, the largest group of funds (GPs) in the world is in the United States, followed by China, and then India and Europe. Therefore, the GP fund group in the Middle East is actually not large, whether it is in traditional PE, Web2 VC, or Web3 funds.

Because this market is a user market, it is more about founders supported by global funds expanding their business here. For example, the largest search engine in the Middle East is Google from Silicon Valley, the largest short video platform is TikTok from China, and the largest crypto exchange in the Middle East also originated from Asia, which is Binance.

Our ecosystem, with the world’s largest Bitcoin mining farm and the largest compliant exchange investment in the Middle East, as well as Cypher Capital, is already the largest Web3 presence in the entire Middle East region. At the same time, due to our position advantage in this region and our cooperation with sovereign funds, we are currently and will continue to lead the development of the Web3 ecosystem in this region. In the future, we hope to attract more developers and investors to this market.

10. ChainCatcher: Under the regulatory crackdown on cryptocurrencies by the US SEC this year, encrypted projects represented by Coinbase have announced their expansion into the United Arab Emirates. What specific advantages does the UAE have in terms of cryptocurrency policies and the cryptocurrency business environment?

Bill: The UAE has always been very welcoming to the entire Web3. I understand it as a good balance, neither completely open nor overly strict regulation, but always striving for a balance between openness and regulation.

Some controversial founders, such as Su Zhu and Kyle, can still reside in Dubai before regulatory and enforcement agencies reach a conclusion. This is tolerance. At the same time, we can see that regulatory agencies in both Abu Dhabi and Dubai have been keeping up with the latest global regulatory trends and requirements for local founders. I think this is the best balance in my opinion.

Therefore, not only Coinbase, but also more centralized institutions and decentralized protocols are choosing the Middle East as their future regional or even global headquarters.

11. ChainCatcher: Recently, there has been a rise in Bitcoin mining in the UAE. Can you share which specific crypto sub-sectors or narratives have clearly emerged in the UAE in the past year? Which entrepreneurial areas may be favored by UAE Web3 startup projects?

Bill: Yes, the sovereign fund ADQ in the UAE jointly invested with us to establish a $650 million Bitcoin mining farm in 2022, which is also the first sovereign fund-supported mining farm in the Middle East.

In the previous cycle, more and more sovereign countries have started paying attention to this field, treating Bitcoin as a proven “digital gold” asset class for strategic reserves and even using this digital gold to transform their own currency systems.

Of course, when it comes to specific sub-sectors or narratives, I think Crypto is an industry that has been globalized from day one. Therefore, we can see the manifestation of a global theme in different regions’ entrepreneurial communities, without any different, localized, or non-global narratives. The UAE, especially Dubai, is the Hong Kong and Silicon Valley of the entire Arab world. Here, we have founders from all over the world, doing their own things in different sub-sectors, from Layer1 projects like Polygon/Ton, to applications like Biconomy, and our Phoenix as the world’s largest BTC mining farm. Whether they are Chinese, Indian, Slavic, or Persian, they can all explore their own world here.

12. ChainCatcher: What is the attitude of the general public in the UAE towards Web3/Crypto? How would you summarize the Web3/Crypto investment atmosphere in the UAE compared to regions with a larger number of cryptocurrency users, such as South Korea and Vietnam? Any interesting insights to share?

Bill: Everyone knows that South Korea and Vietnam are places with a large number of active cryptocurrency users because the “gambling culture” has always been prevalent in these places, so this user behavior is understandable. In the Middle East, including the United Arab Emirates, I feel that the investment in tokens is not so aggressive, but there is great potential for investment in NFTs. This may be closely related to the local customs of pursuing physical/virtual consumer goods to showcase their social status. I often participate in Punk and Ape gatherings here, and I can strongly feel this.

13, ChainCatcher: You have established a large-scale Web3 offline community CypherHub in Dubai. What are the most discussed topics or the most impressive content of CypherHub this year?

Bill: CypherHub is a co-creation space of over 1,000 square meters under the Ferris wheel on the Dubai beach. In the past three years, due to the epidemic, it feels like our industry has been conducted online, but in the end, people still need to return to offline and community. Offline is a very good catalyst for building trust.

We regard CypherHub as the “meet up place” for the future Web3 community in the Middle East. This year, the most discussed topic is the construction of the Web3 entrepreneurial ecosystem in the United Arab Emirates. As the most diversified region in all Web3 Hubs worldwide, we have unique advantages to establish a global offline community.

Forget the cycle, focus on technology and user base

14, ChainCatcher: Regarding the recent traditional financial institutions lining up to apply for Bitcoin spot ETF, do you think the chances of success are high? The entry of traditional institutions into encryption is actually a very old narrative. What do you think of the timing of traditional financial institutions entering the market against the trend and the impact it will bring?

Bill: I am very optimistic. Just like O2O had its first attempt in the Internet bubble in 2000, such as WebVan that caused many top funds to fail. However, at that time, the computing terminals were PCs instead of mobile phones, and cold chain and logistics were not mature, so it was abandoned.

But today, whether in the United States or China, users can place orders for fresh food on the mobile end, which has become a business with a GMV of over 1 trillion dollars, a huge market. I want to use this example to illustrate that if a trend is valuable, the failure of the first practitioners does not mean that it will not happen in the future. It may happen in the second or third attempt, when the timing, location, and people are right, it will happen, and once it happens, it will have a huge impact on the industry and users. Therefore, for meaningful innovations, we never ignore the “time” factor, as long as we give it time and patience, it will happen.

Therefore, the trend of BTC’s future ETF is the same. All the big money in the world (sovereign funds, mutual funds, etc.) and small money (retail investors, etc.) will allocate BTC, this “gold 2.0” product. At least in my personal opinion, this is a common sense that will definitely happen, but the remaining question is when and where. Once traditional institutions start to enter, it means that a part of the trillions of dollars in global fiat currency will subscribe to the Crypto market, which currently has only a market value of 1 trillion dollars. This will have a huge impact on the development of the industry.

15, ChainCatcher: As we are already halfway through 2023, let’s review the first half of the year and summarize the events or trends that have had a profound impact on the cryptocurrency industry. And what are the most noteworthy events or narratives to pay attention to in the second half of 2023?

Bill: The most impactful event for me has been the tug-of-war with regulations. I believe this is inevitable for the industry’s development. In the future, the coexistence of financial regulations and industry innovation will be the new norm, and a compromise between hawks and doves will also be an inevitable trend. Of course, as individuals, our ability to influence such macro-level matters is limited. We should accept their existence and learn to coexist with them.

Recently, I have been paying more attention to the development of X (formerly Twitter) and LianGuaiyLianGuail’s stablecoin. Both have hundreds of millions of users, and their progress in the crypto industry may push the user base of our industry to a new level.

16, ChainCatcher: It has been about six months since Binance’s BUSD was suppressed by regulations at the beginning of the year, and then LianGuaiyLianGuail launched the USD stablecoin PYUSD. How do you view the intentions or changes in US regulations, and the impact of PYUSD on the crypto industry?

Bill: Traffic is the most expensive ticket in the world of business. Whether it’s offline commercial real estate (e.g., Macy’s, Wanda Plaza), Web1 portals, Web2 TikTok, or Web3 wallets/exchanges, whoever has the traffic dominates. Even in the US market, all players with traffic have been eyeing crypto for a long time. Unfortunately, Facebook died on the beach; otherwise, it might have brought its 4 billion non-Chinese Web2 users into Web3. I think it’s about making a plan and then acting on it. As a veteran of Fintech 1.0, their announcement at this time point means LianGuaiyLianGuail has enough strength to lead its 400 million users into crypto with this stablecoin. If they succeed, the crypto market will become a billion-user market, and I look forward to and believe that this moment will come in the next 24 months.

17, ChainCatcher: With traditional financial giants applying for Bitcoin spot ETFs and LianGuaiyLianGuail launching a USD stablecoin, there is a lot of discussion in the crypto community about whether the “next bull market will come soon.” What are your predictions for the timing or catalyst of the next bull market?

Bill: Small years don’t know big years. I have always believed that the “four-year cycle theorists” are both “CryptoNative” because they are well versed in the past eight years of history, but also unfortunate “CryptoNaive” because they have failed to understand the long-term cycles of global politics, economics, and currencies.

In the past two cycles, we experienced the largest-scale fiat quantitative easing cycle in human history. So, as long as you are a risky asset, it doesn’t make sense if you don’t rise. But things are different now; the paradigm has changed, the global logic has changed, and “money” has become more expensive (global interest rates have risen from 0 or even negative by several hundred basis points). Even who holds the power in this world is about to change.

So, when you ask me if a new bull market will come, I would advise everyone to forget about the cycles and focus on the fundamentals, to focus on the technology and user base instead of the asset price. “Bodhisattvas fear the cause, sentient beings fear the effect.” The effect refers to the asset price, while the cause refers to the fundamentals. I hope that all our industry partners can pay more attention to the fundamentals, which means the development of technology and user scenarios. “The future is already here – it’s just not evenly distributed.” Let us enter the game with humility, while also watching and waiting. Thank you.

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