Pantera Capital Management LP, the hedge fund reportedly managing the investments of Fortress Investment Group LLC’s executives, reportedly invested $10 million into Bitstamp last year.
At the time, MtGox had been the most prominent dollar-based Bitcoin exchange in the world. The investment appears to have paid off, as Bitstamp is now the biggest such exchange with MtGox out of the picture. According to Bitcoinity.org, Bitstamp currently facilitates around 11% of total bitcoin trading volume in the world. When looking only at dollar-supported exchanges, they command approximately 40% of the market.
The investment was reportedly part of a strategy to invest in a well-established Bitcoin business early on in the fund’s life. Earlier last year, Pantera contributed $9 million toward an investment in Ripple Labs, which also reportedly saw contributions from other Silicon Valley funds.
Well capitalized and looking to assure customers of their trustworthiness in a highly unregulated environment, Bitstamp enlisted a third party to oversee its books last year. In dealing with fiat, they also employ AML measures such as requiring ID for new customers.
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Pantera’s deal ranks as one of the largest single such investments of its kind in a Bitcoin-related venture. Recently, Chinese Bitcoin exchange OKCoin also got $10 million from investors.
Fortress is a global investment management firm specializing in alternative investment products. As of December 31, they had $61.8 billion worth of funds under management. They are publicly traded (FIG) with a market cap of $3.8 billion.
Pantera disclosed its launch of a $147-million Pantera Bitcoin Advisors fund in a regulatory filing in December. Other than that, its operations are highly opaque. It has not expounded upon the fund’s objectives, only circulating a daily digest of Bitcoin news (BitFlash) and periodic research notes. Pantera’s website consists of a logo, phone number and email address. Appending the URL does lead you to a search page which doesn’t seem to return any results. As of this time, we have not received a response from them to our inquiry for an update on the Bitcoin fund.
On February 27, Fortress disclosed that it has sustained unrealized losses of $3.7 million on a $20 million investment in Bitcoin in 2013. Michael Novogratz, a principal and director at Fortress told a banking conference in New York in October: “Put a little money in Bitcoin… Come back in a few years and it’s going to be worth a lot.”