Those pension funds have a small part of their portfolio chasing high-yield investments. I don't cry crocodile tears when they overperform the SP500, and I can't say I'll be crying them when they underperform.
... Although given how frequently the Ontario Teachers' Pension fund has made the 'Pension funds invests into an incredibly dumb startup' news cycle, I suppose grifters, thieves, and conmen might consider them to be an easy mark.
VC is a very small component of a pension fund; it's money that's often deliberately invested in weird decorrelated shit, for portfolio-theoretic reasons. There are lots of reasons to have a problem with crypto and defi! But the safety of pension funds vis a vis institutional VC is probably not really one of them.
(You can imagine batshit pension funds that invest directly in crypto/defi stuff; that's extremely problematic.)
I regret to inform you that it was not isolated to "crypto funds". A lot of VCs mish-mashed them together with their other investments and slapped a Cathy Wood style name on it like "future innovation fund". VCs are mostly just salespeople, and so are founders. VCs sell to organizations such as pension funds, and founders sell to VCs. Most VCs lose money, especially in an environment full of froth, and most VCs don't know what they are really doing. From what I have observed, a lot of laypeople have a ton of respect when they hear the word "VC".
There is a lot of literature on how much pension funds are chasing exotic and high-risk investments due to the unexpected longevity of pensioners and persistence, until recently, of low interest rates
