The very public spat raises uncomfortable questions about how crypto's biggest funds evaluate the projects they back, and the ones they don't.
Nothing says “measured professional critique” quite like calling someone a huge scammer on the internet and then issuing a partial retraction less than an hour later.
Tom Schmidt, a general partner at Dragonfly Capital, did exactly that on June 5, publicly labeling the Nova Markets team as “huge scammers” just one day after the on-chain perpetuals exchange announced its funding round. The round included names like Wintermute Ventures, Cumberland, and GSR. Schmidt didn’t just question the project. He questioned the judgment of every firm that wrote a check.
The 52-minute reversal
Approximately 52 minutes after his initial broadside, Schmidt walked back part of his statement, specifically retracting his characterization of certain legacy investors’ relationships with the project.
The apology, however, came with an asterisk. Schmidt maintained his condemnation of the Nova Markets team itself, describing their approach as a “classic bad faith maneuver.”
Nova’s founder, Tiago Barbosa, fired back by framing Schmidt as a former supporter who had turned critic. Barbosa also pushed back on claims Schmidt made about Valhalla, a previous project, calling them factually incorrect.
What Nova Markets actually does
Nova Markets is building on Hyperliquid’s HIP-3 framework to create a permissionless exchange for perpetual contracts. The target markets extend well beyond typical crypto pairs.
Nova wants to facilitate rapid listings of assets that centralized exchanges generally won’t touch: pre-IPO equities, commodities, and other novel markets. The team has also signaled plans to expand into prediction markets.
The HIP-3 framework enables permissionless perpetual contract creation on top of Hyperliquid’s infrastructure, meaning anyone can spin up a new market without waiting for a centralized listing committee to approve it.
The due diligence problem
Dragonfly Capital closed a $650 million fund in February 2026, making it one of the larger dedicated crypto crypto venture vehicles currently deploying capital. When a GP at a fund that size publicly questions whether other investors did their homework, it carries weight.
The investors named in Nova’s round aren’t nobodies. Wintermute Ventures is the investment arm of one of crypto’s largest market makers. Cumberland is a subsidiary of DRW, a major traditional trading firm. GSR is a well-established crypto trading firm.
Schmidt’s partial retraction suggests he recognized, belatedly, that his initial comments were broader than the evidence supported. Retracting the specific accusation against investors while maintaining the underlying criticism of the project itself suggests Schmidt may have had concerns about the team that he expressed in the worst possible way.
