Billionaire investor Steven Cohen is entering the emerging market by investing into a cryptocurrency hedge fund that favors Bitcoin and Ethereum over Ripple.
Cohen Private Ventures — the hedge fund of Steven A. Cohen, whose estimated net worth currently stands at $14 billion USD — has invested in Autonomous Partners, led by early Bitcoin investor Arianna Simpson.
“I’ve only brought on partners that I think can be very much value-add [sic] beyond their capital,” Simpson told Fortune.
The move comes despite crypto hedge funds being hammered so far this year — with the total cryptocurrency market cap contracting from $800 to around $250 billion.
Launched in December 2017 when Bitcoin was roaring, Autonomous Partners invests in digital assets and blockchain startups while allocating a small share of its funds to buy well-established cryptocurrencies such as Bitcoin $6280.45 +0.28% and Ethereum $441.276 +0.42%.
The fund is particularly interested in solutions that can speed up transactions and help blockchains scale globally, as well as provide greater privacy for users.
Despite always “looking at what is the next generation,” however, Simpson still thinks “money” is the most underrated blockchain application — though she adds that it’s probably just easier for investors to buy Bitcoin outright.
I still think “money” is the most underrated blockchain application.
Notably, Cohen’s investment will not be exposed to Ripple $0.443617 +0.27%. Simpson’s fund has shunned the third largest cryptocurrency by market capitalization due to concerns over its centralization — as the company Ripple holds the lion’s share of its XRP tokens.
Additionally, when the Securities and Exchange Commission (SEC) stated that Bitcoin and Ethereum are not securities last month, it left the door open to classifying less ‘decentralised’ digital assets as securities in the future.
In any case, the possibility of Ripple being drawn into even more lawsuits — particularly with government regulators — certainly presents a big risk for hedge funds, as Ripple has faced endless scrutiny over its decentralization claims.
“It’s quite clear to us that Ripple is a security,” said Multicoin cofounder, Kyle Samani. “If Ripple is labeled a security formally by the SEC, all of the crypto exchanges are going to stop trading Ripple.
So if that happens, liquidity is going to dry up on XRP and the price will plummet.
Meanwhile, Ripple’s chief market strategist, Cory Johnson, has denied the claims. “We absolutely are not a security,” he stated. “We don’t meet the standards for what a security is based on the history of court law.
Ripple CEO Brad Garlinghouse also disagreed with the assumptions that XRP is a security, while, ironically, urging Coinbase to list the XRP token. He said:
I think it’s really clear that XRP is not a security. I don’t think that our ownership of XRP gives us control. Saudi Arabia owns a lot of oil—that doesn’t give them control of oil.
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Cohen Private Ventures — the hedge […]