The ambitious "Network State" project, Praxis, recently announced that it secured $525 million to fund the creation of a crypto-friendly city. 

Designed to promote innovation in cryptocurrency, artificial intelligence, biotech, and more, the city will be built in a tech-forward “Acceleration Zone” with reduced regulatory barriers. 

However, questions are being raised about the legitimacy of this venture, particularly surrounding the involvement of notorious investor GEM Digital.

What is Praxis?

Praxis, founded by 28-year-old Dryden Brown in 2019, presents itself as the world’s first "Network State," a novel concept of a city born out of internet-native alliances. The project's mission is threefold:

1. Accelerate Technological Progress: Praxis aims to develop a city within an Acceleration Zone, a Special Economic Zone (SEZ) with minimal regulatory barriers. This would reportedly enable rapid innovation in cryptocurrency, artificial intelligence, biotech, and energy.

    

2. Create Heroic Ways of Living: Through institution building and a culture that promotes the traditional values of Western Civilization, Praxis wants to redefine modern living.

    

3. Build a City for the 21st Century: The city will feature futuristic yet classical aesthetics, designed by renowned Zaha Hadid Architects.

With this vision in mind, Praxis has attracted the attention of prominent investors, including Arch Lending, GEM Digital, and Manifold Trading. 

The funding will be used to acquire land, secure permits, and begin construction. It consists primarily of a drawdown facility - a mechanism that releases funds in stages as specific milestones are reached, such as acquiring a plot of land and tokenizing ownership.

Despite the buzz, the exact location of Praxis’ city has yet to be determined.

Praxis’ Vision for the Future

According to the project's founders, the city will attract top talent and entrepreneurs, unlocking breakthroughs in technology and scientific fields such as AI, crypto, and advanced manufacturing. The city will serve as a cultural beacon, promoting the traditional values of Western civilization.

More than 14,000 people, known as “Praxians,” are already part of the network, with members spread across 84 countries, according to the announcement. Praxis aims to leverage this global community to build a city that represents a new way of life — one focused on heroism, beauty, and technological progress.

However, doubts loom over the legitimacy of the $525 million in funding, primarily due to the involvement of GEM Digital.

GEM Digital’s Controversial Involvement

A key player in this funding round is GEM Digital, a firm known for its "investment commitments," according to crypto journalist Wu Blockchain. Out of the reported $525 million, $500 million is attributed to GEM Digital.

In several past projects, GEM Digital reportedly made large investment pledges without actually releasing the promised capital upfront. Instead, funds were tied to the sale of crypto tokens on public exchanges or linked to specific performance metrics.

Per reports, several projects funded by GEM have been accused of using their "commitments" to manipulate market sentiment. Following announcements of GEM’s investments, token prices often surged, only to collapse shortly afterward. 

Critics argue that this pattern of behavior suggests GEM Digital’s investments may not be as solid as they appear.

For instance, it reportedly committed $35 million to Travel Coin, a relatively obscure blockchain travel project. In some cases, their investments never materialized fully but were used to manipulate token prices temporarily.

Moreover, projects such as LITHO and Peculium saw significant price hikes after GEM’s commitment, only to collapse in value days later.

According to a Wall Street Journal report, Praxis will need to list crypto tokens on a public exchange to unlock much of the funding. This means that the city’s construction and development are dependent on token performance, a factor that could introduce significant volatility and risk.