Banking Investment News

Chinese cloud provider Xunlei to set up $100m blockchain fund

Xunlei website

Yesterday, China-based cloud hosting firm Xunlei announced that it will establish a private equity fund for blockchain technology investments. The fund will be worth up to $100 million and operate independently from Xunlei’s Chinese entities.

Founded in 2003, the company provides cloud computing services such as its download manager, the most popular in China, and peer to peer software. The firm boasts former directors of Tencent and Xiaomi on its board. In 2017 Xunlei moved towards blockchain and developed ThunderChain, its multichain platform, which claims to reach one million transactions per second.

Released in April last year, ThunderChain focuses on high performance and interoperability. Its impressive transaction rate is realized through separate chains working in parallel. Meanwhile, ThunderChain supports Ethereum smart contracting language Solidity and can link to the Ethereum Virtual Machine.

Though its move to blockchain wasn’t entirely smooth. To fund its development, Xunlei released the Linktoken in 2017 which was given to users in exchange for a contribution of bandwidth. Some investors complained this token was a ‘disguised ICO’, despite Xunlei insisting otherwise. As a US-listed company, this concern caused share prices to fall and class actions.

Xunlei made over $47 million in revenues over the last quarter, which is a net loss of $2 million. Now we know the firm plans to invest heavily in blockchain initiatives; from business models to digital assets. Interestingly, Xunlei is operating the fund outside of its native China, likely to complete international investments.

Though $100 million may seem ambitious, the Nasdaq-listed company’s share price rocketed after China’s president, Xi Jinping, endorsed blockchain technology. From just over $2 a share last week, the value had more than doubled to $5.70 on Monday.

The news also comes shortly after Beijing’s ‘Silicon Valley’ announced plans to subsidize blockchain startups. Xi’s comments and this announcement characterize a boom in the Chinese blockchain space, where the country thrives. Other recent projects include a cross-border trade initiative and JD.com’s asset-backed securities system.