In the fast-moving world of crypto startups, it’s becoming more common for founders to cash out early — and walk away with millions — even before their companies have truly proven themselves.

Take Bam Azizi, for example. He started a crypto payments company called Mesh in 2020. Just recently, Mesh raised $130 million in a Series B funding round. But not all that money is going to grow the business. At least $20 million went directly to Azizi through what’s called a “secondary sale.” This means new investors bought some of Azizi’s personal shares, giving him a big payout — without Mesh having to go public or get acquired.

These kinds of secondary sales are becoming more popular in today’s hot crypto market. Founders are able to sell parts of their ownership early, turning shares into real money — often years before their startups have achieved success. This raises questions about whether such big early paydays can mess with founder motivation or create a “get-rich-quick” culture in crypto.

Mesh claims things are going well. The company recently partnered with PayPal and launched an AI wallet. But the bigger picture shows a trend: more crypto founders are making money early, regardless of their startups’ performance.

Another example is Dan Romero, who founded Farcaster, a decentralized social media platform. Farcaster raised $150 million in mid-2024, led by Paradigm. Romero personally took home at least $15 million from secondary sales as part of that funding. He’s also known for his wealth — he gave a tour of his $7.3 million Venice Beach compound to Architectural Digest, which compared the property to a “small Italian village.”

Despite the hype and huge raise, Farcaster has struggled. It reportedly had fewer than 5,000 daily users last year and now lags behind rivals like Zora. Romero hasn’t commented on the platform’s performance or his personal payday.

Then there’s Omer Goldberg, founder of Chaos Labs, a crypto security firm. He earned around $15 million from a $55 million Series A round earlier this year. Chaos Labs has support from PayPal Ventures and plays a big role in blockchain security discussions, but neither Goldberg nor the company has responded to inquiries.

These founders — Azizi, Romero, and Goldberg — are part of a broader trend in crypto and tech: secondary share sales are on the rise, not just in crypto but also in areas like artificial intelligence (AI). With venture capital firms like Andreessen Horowitz, Paradigm, and Haun Ventures fighting for top deals, offering liquidity to founders has become part of the negotiation.

So how does it work? When a venture firm wants to lead a funding round, they may agree to buy some of the founder’s personal shares. This gets them access to the deal while giving the founder instant cash. Sometimes early employees also get to sell shares, but not always — and sometimes they don’t even know the founder is cashing out.

For investors, secondary shares come with risks. They’re usually common stock — which means fewer protections compared to preferred shares investors normally get. And while these deals can secure a spot in hot startups, there’s no guarantee those startups will succeed. Crypto is especially known for big promises that often don’t pan out.

This isn’t new. Back in 2016, crypto projects raised millions through Initial Coin Offerings (ICOs), promising revolutionary ideas that mostly didn’t deliver. Many projects faded into obscurity, and some founders disappeared altogether.

By 2021, deals began to look more like traditional Silicon Valley fundraising rounds. Founders got stock instead of tokens — but secondary sales continued. For example, at MoonPay, executives sold $150 million worth of shares during a $555 million round. Later, the CEO made headlines for buying a $40 million Miami mansion just before the crypto market crashed in 2022.

Another case is OpenSea, once the top NFT marketplace. The company raised over $425 million across multiple rounds, much of it through secondary sales to founders. But by 2023, interest in NFTs had dropped sharply, prompting OpenSea to shift its focus entirely.

Given all this history, some wonder why investors keep letting founders cash out so early. One venture capitalist argues founders should be paid enough to live comfortably but not hit the jackpot until after an IPO or acquisition.

Derek Colla, a partner at law firm Cooley LLP who structures startup deals, says crypto is different from other industries. Crypto companies are often “asset-light” — meaning they don’t need expensive equipment or infrastructure — so more money can go to people. He also points out that crypto relies heavily on influencer marketing, making it easier for charismatic founders to attract big checks. “You’re building a cult,” he says.

Glen Anderson, CEO of Rainmaker Securities, which specializes in secondary sales, says founders are cashing out early simply because they can. “We’re in a hype market,” he explains. “If you have a good story to tell, people will buy.”

Anderson doesn’t believe that founders selling shares means they’ve lost belief in their companies. Still, there’s debate over whether it’s fair — or smart — for them to take home massive paydays when their startups might never succeed.

Colla agrees that great entrepreneurs often avoid selling their shares early because they believe those shares will be worth far more later on. “The best founders want to keep as much ownership as possible,” he says.

In today’s booming markets for crypto and AI, early cash-outs might be tempting — but whether they help or hurt startups in the long run is still up for debate.