American Billionaire Steven Cohen Takes Stake in Crypto Hedge Fund
Billionaire Steven Cohen is investing in a cryptocurrency and blockchain hedge fund, according to a Bloomberg report. The move comes amid a growing number of cryptoasset funds opening for business.
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Hedge Fund Looking to Invest in Cryptocurrencies, Blockchain Infrastructure
Autonomous Partners, the hedge fund Cohen has invested in, is run by Arianna Simpson, a venture capitalist who previously worked at blockchain security company BitGo and was formerly at Facebook. Cohen used his firm Cohen Private Ventures to make the investment, per Bloomberg’s anonymous source.
Simpson told Bloomberg that Autonomous Ventures is “interested in investing in cryptocurrencies that serve as general purpose money and companies that are building the next generation of financial infrastructure,” as well as investing directly in cryptocurrencies like bitcoin and Ethereum.
Other investors in Autonomous Partners include American VC firm Union Square Ventures, Coinbase CEO Brian Armstrong, and Craft Ventures Co-Founder David Sacks.
Cohen is no stranger to controversy. The billionaire also runs investment firm Point72 Asset Management, which holds assets valued at $12 billion USD, per Forbes. Up until 2013, he ran SAC Capital, but was forced to shut it down after the firm pled guilty to insider trading charges. He was banned from the securities industry for two years as part of the plea bargain.
Cryptoasset Funds a Growing Trend
One of the big stories of 2017 was the rise of the initial coin offering (ICO) as a way to crowdfund capital for crypto startups. In the first quarter of 2018, $6.3 billion was raised via ICOs, a figure predicted to hit $10 billion by year’s end. That far exceeds the $5.6 billion raised in 2017.
Alongside those developments, crypto-focused investment vehicles, including hedge funds, family offices, and venture capital funds, have been a growing trend in the crypto space. As of May, $1.3 billion in venture capital money has been invested in crypto and blockchain companies so far in 2018, according to TechCrunch, far outstripping the entire amount of crypto/blockchain VC money raised in 2017.
New Entrants Numerous, Results Varied
Examples of crypto-focused investment funds created over the past year are numerous. Last year, Matt Huang, a partner at Silicon Valley venture capital firm Sequoia Capital left the company to create a crypto hedge fund with Coinbase co-founder Fred Ehrsam. In April, there were reports that VC firm Andreessen Horowitz would be launching a new cryptofund.
Shortly before that, reports emerged that investor George Soros would begin trading cryptocurrencies in his family office, which was formerly a hedge fund. That was followed quickly by news that Venrock, the venture capital division of the Rockefeller Foundation, was partnering with Coinfund to invest in crypto-based assets.
American exchange Coinbase announced it was creating a $15 million venture capital fund in April. Finally, back in July of 2017, an analyst at New York-based Union Square Ventures, Joel Monegro, left the firm to start crypto fund Placeholder Capital.
But with the cryptocurrency markets down more than 50 percent from their highs during the winter, returns from some cryptoasset funds have been poor so far this year. Per Eurekahedge, the 2018 return for its Crypto-Currency Hedge Fund Index sits at minus 38.5 percent. That contrasts sharply with 2017, when the index enjoyed returns of 1,708 percent.
What’s your take? Is the rapid inflow of traditional financial sector money into crypto assets likely to continue? Is it healthy for the industry?
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