Billionaire investor Steven Cohen enters the emerging crypto market by investing in a crypto hedge fund that has Bitcoin and Ethereum in its repertoire, but not Ripple because of its risk of being classified as a security.
Billionaire Steven Cohen towards Bitcoin code
Cohen Private Ventures – the hedge fund of Steven A. Cohen, whose net assets are currently estimated at $14 billion – has invested in Autonomous Partners, led by early Bitcoin code investor Arianna Simpson. “I have only involved partners that I believe can offer a great deal of value over and above their capital,” Simpson told Fortune.
Autonomous Partners was launched in December 2017 and invests in digital assets and blockchain start-ups, with a small portion of the funds being used to purchase established crypto currencies such as Bitcoin and Ethereum. The fund is particularly interested in solutions that accelerate transactions, scale blockchains globally and provide more privacy to users.
The centralisation of Bitcoin profit is worrying
In particular, Cohen’s investment will not be dominated by Bitcoin profit. Simpson’s fund has avoided the third largest crypto currency by market capitalization as Bitcoin profit holds the lion’s share of its XRP tokens.
When the Securities and Exchange Commission (SEC) last month found that Bitcoin and Ethereum are not securities, it suspects that less decentralised digital assets will be classified as securities in the future. In any case, the possibility that Ripple will be involved in even more litigation – particularly with government regulators – poses a major risk to hedge funds as Ripple faces endless scrutiny of its decentralisation claims.
“It is clear to us that Ripple is a security,” said Multicoin co-founder Kyle Samani. “If Ripple is officially classified as a security by the SEC, all crypto exchanges will stop trading Ripple.”
Ripple CEO Brad Garlinghouse disagreed with the assumptions that XRP is a security:
I think it’s really clear that XRP is not a security. I don’t think our ownership of XRP gives us control. Saudi Arabia owns a lot of oil – that doesn’t give them control over the oil.