Nick Tomaino on Crypto Investing, FTX and the NFT Debate

In this October 2023 interview, 1confirmation founder Nick Tomaino tells Harry Stebbings how an early interest in online sneaker communities led him toward Bitcoin. After reading about its use on Silk Road, he visited Bitcoin forums and found a global community organized around shared beliefs and incentives.

Tomaino joined Coinbase, but says he was eventually pushed out as the company grew and his style became a poor fit for its structure. He recalls the departure as painful, then concluded that early-stage investing would better suit his knowledge of products and the crypto industry.

After Coinbase he joined venture firm Runa Capital, wrote a crypto newsletter and helped create Token Summit. He says these activities, along with his industry reputation and timing, helped him raise 1confirmation’s first $26 million fund. He attributes much of his success to persistence and conviction, while Stebbings emphasizes luck.

Tomaino recounts losing approximately $50,000 worth of Bitcoin in a phishing attack before Coinbase added two-factor authentication. He says it was all the money he had at the time. The experience was painful and briefly made him consider leaving crypto, but he decided to continue.

His 2017 first fund targeted 20 to 30 early investments, typically $500,000 to $1 million initially. He says he could have raised more but wanted a size compatible with early-stage opportunities. Subsequent funds were $50 million in 2019 and $130 million in 2021, alongside an approximately $80 million NFT fund.

He explains that the commonly cited $1 billion in assets under management reflected the marked value of the portfolio, not simply money raised or cash returned. His firm remained focused on early-stage investments even as its check sizes grew. These fund figures are his account as of the interview.

Tomaino says the first fund had 22 investments and no total losses at that point; two dissolved projects returned roughly 50% and 70% of their invested amounts. He stresses that the 2017 fund was only about six years old, so outcomes were still developing. This is an interim fund-specific claim, not a prediction of final returns.

He distinguishes founders building durable products from those he sees as extracting value during a boom. The firm bought both equity and tokens; it avoided initial coin offerings in its first fund because, in his judgment, the founders it encountered through that route were more focused on short-term fundraising.

Tomaino says the fund also bought Bitcoin and Ether. Stebbings cites a 5.13-times distribution figure, and Tomaino says most liquidity came from equity. The figure is a reported distribution multiple, distinct from unrealized portfolio marks and not independently verified in the interview.

He says criticism of crypto venture capital partly reflects a pattern in which investors buy private tokens, promote projects and later sell to retail buyers. He notes that practices and holding periods vary and does not claim every firm participates. The interview does not establish the legality or facts of any individual transaction.

Tomaino alleges that Alameda invested in token projects and FTX listed and promoted them. He explicitly says he does not know how quickly any tokens were sold and that the rules vary. These are his allegations and characterizations, not findings established by this interview.

He says some firms are worse than others and believes prestige can still attract founders despite criticism. On whether crypto rounds are unusually collaborative, he sees a mix much like traditional venture: fund size, investor preferences and the founder all affect the answer.

For liquidity, Tomaino favors selling a portion of a large winner after a later round and returning cash to limited partners, while keeping most of a position when the firm believes in a long-term outcome. He says the firm sold roughly 10–30% of some winning positions, not the majority.

He argues crypto fund returns should be compared with a simple basket of Bitcoin and Ether over a similar period, after accounting for fees. A venture manager charging substantial management fees and carry, he says, should justify the extra cost by outperforming a readily available alternative.

Tomaino favors greater transparency around fund performance rather than treating fund size and publicity as measures of success. He acknowledges that disclosure must respect applicable rules. His remarks are about what he thinks would help investors evaluate managers, not legal advice.

He expects both established and newer firms to participate in crypto venture. He praises Chris Dixon and a16z’s historical investments but thinks some funds grew too large. When Stebbings raises accusations of “pump and dump,” Tomaino says he does not think a16z is dumping, while expressing concern about some hyped token projects; the interview supplies no evidence of misconduct by a16z.

In his view, too much capital flowed into large crypto funds without sufficient differentiated insight. He thinks many should be smaller and expects limited partners to scrutinize results more closely. His suggestion that investors could make money by holding Bitcoin and Ether is a speculative view, not a recommendation or assured outcome.

He says relatively few crypto funds were being raised at the time and predicts institutional appetite will depend on whether the sector delivers useful products and returns. This is a 2023 assessment of fundraising conditions, not a current market survey.

Turning to FTX, Tomaino says people who helped create its prestige should face scrutiny alongside its founder. He calls this a “fraud of perception,” meaning an image of credibility that he believes diverged from reality. He does not establish that every person who promoted or invested in FTX knew of financial wrongdoing.

He makes further allegations about FTX’s relationships with politicians, regulators and the media. Those claims are his opinions and accusations; the interview does not provide evidence sufficient to establish that the people involved were bribed or complicit in a crime. He himself distinguishes perception-related conduct from conduct that may be illegal.

Asked whether venture investors will be held accountable, he predicts that the broader story will emerge slowly. He also predicts that Sam Bankman-Fried would go to prison; at the time of the interview this was a prediction, and the discussion should be read in its historical context rather than as a current legal update.

Stebbings challenges the case for NFTs after describing his own loss on a purchase. Tomaino argues NFTs could let creators sell digital items to supporters and align incentives. He is a crypto and NFT investor, and these potential benefits depend on the rights attached to a specific token and the existence of willing buyers.

Stebbings questions why a successful creator would need NFTs rather than subscriptions or paywalls, and why an obscure creator would find buyers. Tomaino concedes that NFTs may never be useful to every established creator. He offers an emerging musician selling items to a small group of early supporters as a possible future use case, not an established success.

The two debate whether popularity causes people to like music or simply helps them discover it. Tomaino draws on René Girard’s theory of mimetic desire; Stebbings emphasizes individual preferences and biological responses. Tomaino acknowledges both influences but believes social imitation is stronger than many people admit.

Asked about declining NFT trading volumes and OpenSea, Tomaino explains his thesis as an early investor: if NFTs grow substantially, a trusted marketplace could be important. He says that outcome is not guaranteed and does not know whether buying at OpenSea’s $13 billion funding-round valuation was attractive.

He says 1confirmation sold some OpenSea holdings around that round but retained the majority. Asked when NFT trading might recover, he suggests three to five years. His forecast and his assessment of OpenSea are financially interested opinions, not evidence that volumes or valuations will recover.

He sees potential applications beyond visual art, including dynamic tokens, games and music, while acknowledging that several have not yet become major use cases. He also argues that digital art can have value to collectors. These are his investment thesis and hypotheses, not guarantees about token prices.

Tomaino attributes his independent thinking partly to temperament and upbringing. When Stebbings challenges his suggestion that he is not insecure, he clarifies that he does have insecurities but tries not to seek constant approval. He thanks his parents for helping him develop confidence.

Asked whether principles can become dogma, he agrees that conviction can be both useful and limiting. He tries to balance an internal framework with close attention to the outside world. His own criticism of Solana is one example where he says he may have been too rigid.

He describes concerns about Solana’s early marketing and insider ownership, but says he remains open to builders and has missed a significant investment opportunity. These are his contested characterizations and personal investment reflections; the conversation does not establish misconduct by Solana or its investors.

Tomaino calls OpenSea his biggest investment win. He recalls using CryptoKitties and seeing a marketplace as a useful way to trade independently of the original product site. He says 1confirmation led an early round when the deal was not especially popular, guided by its own experience as a user.

Stebbings asks about the fund’s current mark for OpenSea. Tomaino says it was significantly below the prior high and only broadly indicates a range; he does not disclose a precise valuation. A private mark is an estimate at a particular time, not a realized sale price.

He also calls OpenSea a missed opportunity: the fund invested $500,000 initially and brought limited partners into the round rather than committing more itself. In hindsight he wishes he had backed his conviction more aggressively, while recognizing that helping partners access deals can strengthen relationships.

He says the firm did not systematically sell through every rising round: it added some investment on the way up and sold a portion after a large increase. His account illustrates one fund’s decisions, not a generally reliable selling strategy.

In the quick-fire round, Tomaino names funds in which he is a limited partner, including Pronomos and 1789 Capital. He describes Pronomos’ interest in new jurisdictions and 1789’s America-first focus. These are his descriptions of funds in which he has a financial interest.

He names CryptoPunks as a favorite consumer brand because of its artwork and community, and would choose to dine with René Girard. He believes Girard’s ideas could help people think about conflict and recommends starting with The Scapegoat. These are his preferences and interpretations.

Tomaino says an early belief that prediction markets would become widespread had not yet been borne out. His firm invested in Augur, which he says did not work out. He remains optimistic that markets aggregating information can be useful, while noting that Polymarket had not become mainstream at the interview time.

Looking to 2033, he hopes 1confirmation will remain an early-stage crypto investor and that far more people will use the products it backs. His vision of billions of users is an ambition, not a demonstrated outcome. He closes by thanking Stebbings for the discussion.