Lantern Ventures' Demise Signals Crypto Sector's Post-FTX Reckoning

Lantern Ventures, a London-based cryptocurrency hedge fund founded by former Alameda Research co-founder Tara Mac Aulay, is set to dissolve its external investment funds and return capital to investors after seven years of operation, according to a CoinDesk report. The firm, which managed over $600 million in assets at its peak, is exploring options such as a potential buyer or a relaunch as a family office, though no final decisions have been made. The move marks a significant shift for the firm, which was established on philanthropic principles, with 50% of founder profits historically donated to high-impact charitable causes.

The winding-down process has already begun, with the firm closing to new investments and initiating the return of capital to external investors. Staff reductions are expected, though the exact number of affected employees remains unclear. Lantern's dissolution comes amid broader industry challenges, including the collapse of major crypto firms like Celsius and FTX, which were linked to Mac Aulay's previous affiliations. At the height of the 2022 crypto lender bankruptcy wave, Lantern's affiliate fund, Pharos USD Fund SP, was listed as Celsius' largest single creditor with an $80 million claim.

Mac Aulay, who previously led the Center for Effective Altruism—a philanthropy group aligned with FTX founder Sam Bankman-Fried—has not commented publicly on the firm's dissolution. Lantern's philanthropic ethos, however, remains a defining feature of its legacy. The firm's decision to liquidate follows a strategic reassessment in a market still grappling with regulatory uncertainty and reduced investor appetite for high-risk crypto assets.

The dissolution of Lantern Ventures underscores the ongoing consolidation in the cryptocurrency sector, where firms with deep ties to the industry's pre-FTX era are reevaluating their models. While the firm's exit may not have the immediate market impact of larger players, it signals continued caution among institutional participants. Lantern's potential relaunch as a family office could reflect a broader trend of crypto founders pivoting to private wealth management amid public market skepticism.

Sources indicate that Lantern has engaged in preliminary discussions with potential acquirers, though no concrete offers have emerged. The firm's focus on proprietary trading and its association with Alameda Research—a key liquidity provider for FTX—position it as a unique case study in the post-FTX crypto landscape.

As Lantern Ventures prepares to return funds to investors, the move highlights the fragility of niche crypto strategies in a post-bust environment. The firm's dissolution adds to a growing list of exits in the sector, including the shuttering of major trading desks and hedge funds that once thrived during the 2021 crypto boom.