Daily Archives: February 12, 2021

Another year, another filing.

A bitcoin-based exchange-traded fund could see the light of day in 2021 after a changing of the guard at the Securities and Exchange Commission and some promising developments in the corporate arena, Jeff Kilburg, founder and CEO of KKM Financial and a partner at Valkyrie, told CNBC on Monday.

At least 10 firms have filed and failed to gain approval for the long-awaited product, with the SEC frequently citing security concerns and the market's immaturity as reasons for its denials.

"It's a similar approach to the way I strategically asked my wife to marry me. Around the 15th or 20th time I asked, she finally said yes," Kilburg told CNBC's "ETF Edge."

With bitcoin soaring to record highs on newfound interest from Tesla and other major companies and the CME Group launching ethereum futures this week, the cryptocurrency space is getting the validation the SEC needs to see, Kilburg said.

"I think this is all coming together here in 2021," he said, calling the CME's move a "huge win" for the bitcoin ETF's chances. Valkyrie, where Kilburg is a partner, filed for its own version of the product in late January.

"If they can offer a solution via an ETF, regulate it and it can trade more accurately to the actual spot price of bitcoin, that's the win-win solution for all active and passive investors, even the 'hodlers,'" Kilburg said.

That solution could be close as ever with Gary Gensler, former head of the Commodity Futures Trading Commission, being tapped to lead the SEC and the cryptocurrency market gaining legitimacy, ETF Trends' Dave Nadig said in the same "ETF Edge" interview.

"I'm maybe not quite as Pollyanna about it. I think maybe we're still looking at '22. But I do think it's inevitable, and I think we're starting to make that progress towards a sort of fully liquid, fully exchange-traded crypto vehicle of some sort, whether it shows up in a traditional ETF or not," Nadig said.

Nadig, ETF Trends' chief investment officer and director of research, cited the success of over-the-counter stocks backed by large amounts of bitcoin such as the Bitwise 10 Crypto Index Fund and Grayscale Bitcoin Trust.

"I think that that is really going to force the SEC's hand," he said. "When we have companies like Tesla making bitcoin a major balance-sheet asset and we have companies for whom that is their whole balance-sheet asset trading on the pink sheets, I think it's going to get hard for them to say no for very much longer."

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Long-awaited bitcoin ETF could finally get approved this year, market analyst says - CNBC

Yahoo Finances Brian Sozzi, Julie Hyman, and Myles Udland break down todays market action and outlook with Julian Emanuel, BTIG Managing Director & Chief Equity Derivatives Strategist.

MYLES UDLAND: Let's talk a bit more about everything that's going on in the markets right now. Let's bring in Julian Emanuel. He's the managing director and the head of equity and derivatives strategy over at BTIG. Julian, it's great to speak with you. I'd love to just start the conversation. We were chatting very briefly before we came on the air about the meme stocks, the YOLO trades, everything happening in the market. How are you thinking about these dynamics which are so unique and have come into the market seemingly overnight?

JULIAN EMANUEL: Well, it actually hasn't come in overnight, Myles. If you look back-- in fact, this was an appearance that we made at the end of 2019 on Yahoo Finance where I had a conversation with Charles Schwab himself in the green room, and we were basically talking about-- they had announced a week earlier-- the start of zero fee online trading, and that conversation just galvanized our thought process to the fact that this bull market, which is essentially been going on since 2009, was one that the public has never really been enthusiastic about.

All of a sudden, you have zero fee online trading. The public begins to get interested in stocks in January and February of 2020. We all know what happened after that. But incredibly enough, the public came back stronger than ever in the summer of 2020. And in an environment where there's the kind of liquidity that there is, when people ostensibly have more time on their hands, and the interest in asset diversification and investing in a world where yields aren't very attractive, just something that has continued to proliferate.

And from our point of view, when you look at the evolution of bull markets, the fact that we're in a much more speculative stage right now, I wouldn't yet call it any sort of mania. Could we get there? We could. But the fact is that the public has taken a lot of knocks in terms, especially new investors, and has come back stronger each time, and we're seeing it again this week in the cannabis space. It's really a testament to the resilience and the stick-to-itiveness of this new generation of investor.

Story continues

JULIE HYMAN: I well remember your Charles Schwab encounter, you talking about it, and how excited you were about that, Julian. So I'm glad that you got some sort of actionable insight out of that as well besides just being psyched to meet him. Julian, you know, there seems to be this sort of attitude on the part of most people we talk to that these retail investors are going to get burned, that all of this is going to end badly, but what you're talking about, this sort of stick-to-itiveness and people still coming into these trades suggests maybe it won't end that way? I mean, is there an alternative ending to all of this?

JULIAN EMANUEL: Over the long term, it is likely to be a very significant net positive because, again, this generation of new investors has been under-invested as a percentage of assets. That's a research that's very well known. In the medium term, there's no question about the fact that we are setting up for the potential for this kind of extreme speculation to become more intense, such as what we saw in 1999 and 2000.

And, obviously, that ended badly for several years, but then we think about it and the NASDAQ-100 topped at 4,800 in March of 2000, and here we are 13,014, 14,000. And so, really, what it does is likely going to be at some point a learning experience with regard to the idea of short term trading, but a more retainable experience on the benefits of long term investing.

BRIAN SOZZI: Julian, look, just given the flow that we've seen into equities that have pushed the Dow to record highs here, comparing that, let's compare that to Bitcoin. Just given how everybody is now invested in the market, would you make the case that Bitcoin is under-invested in? And then, by extension, is it undervalued even though we've seen prices really go through the roof the past month?

JULIAN EMANUEL: Well, look, Bitcoin and blockchain itself, and obviously all the other cryptocurrencies, are in what we would call the price discovery phase. It is essentially a new technology, a new way of looking at the world. And from our point of view, again, we think about it in terms of it's a 70 volatility asset, very, very volatile.

When we launched coverage of cryptocurrencies in late November, Bitcoin was at 18,000. We had a $50,000 year end 2021 price target. People thought we were quite aggressive. The same people are now telling us that we're probably not aggressive enough with this price target.

So the truth lies somewhere in the middle in all likelihood, but when you think about all the incremental buyers coming in, the interest that's building, and, on the other hand, the likelihood that the government is going to begin to look at cryptocurrency more carefully from a regulatory aspect, the long term picture looks very, very sound, and we do think that it is a secular bull market, but there are always pullbacks in secular bull markets.

BRIAN SOZZI: Julian, what's your current price target on Bitcoin? Are you looking to raise it?

JULIAN EMANUEL: We think at the moment, frankly, when you think about the news of the incremental very large buyer that we saw at the beginning of the week, that that type of news was something that the market probably was aware of when the chatter started on social media a month or a month and a half ago.

And so from my point of view, again, similar to what we felt in January when Bitcoin first traded over 40,000, we think the market has come a very long way very quickly. So we're going to watch. We think, actually, it's one of these times where a bit of sideways activity is likely to be healthy in preparation for another leg higher.

JULIE HYMAN: And Julian, you can't say it for compliance reasons, but I can. You're talking about Tesla, of course, when you're talking about that big buyer. In addition to looking at all of these assets on the face of it. You're a derivatives guy, too. So you look at the options market. We have seen also it hasn't just been action and straight up equities.

We have seen a lot of action through options at this time. Does that limit retail investors' downside? And how then does this big surge in options activity, how does that play out through the market?

JULIAN EMANUEL: So it actually does limit retail investors' downside because if you buy a put or you buy a call, it is by definition limited risk, theoretically unlimited reward. But what it does potentially do is, because of that profile, encourage the average investor, certainly if they've had a degree of success, which many of them had the last several months, to trade more than they might otherwise normally.

So the structure itself limits potential losses, but because of all the trading activity-- and the call volumes have been absolutely breathtaking. There's no other way of thinking about it, and option prices themselves, particularly on a lot of these meme stocks, have become very expensive because the volatility started moving. So you really have to think about it in a more balanced perspective.

What we would say is, as an investor just pick your spots carefully, understand what you're doing, and hopefully think about the risk reward aspect of it, and let the market work for you, and know that you have limited risk to the downside in those kinds of structures.

MYLES UDLAND: You know, Julian, before we let you go, is this the most interesting market that you've seen in your career? Because I'm just thinking about the arc of this conversation. I mean, this is, like, this is fascinating stuff that we're discussing here that's very different than what the textbook kind of suggests financial markets are like.

JULIAN EMANUEL: So I've been doing this quite a while. I was a proprietary trader in 1999 and 2000. And, frankly, I thought that I had seen it all at that point, but there's no question about the fact that the last year and in particular the last three or four months have been absolutely fascinating, and the benefits of living in the same house with a 23-year-old and a 20-year-old who are actively engaged in social media and investing themselves have been incalculable in my ability to understand it.

MYLES UDLAND: There you go. That is some good old-fashioned sector level channel checking going on there in the Emanuel household. All right. Julian Emanuel, always great to get your thoughts, chief equity and derivatives strategist over at BTIG. I know we'll talk soon.

JULIAN EMANUEL: Thank you.

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Bitcoin outlook: the long term picture looks very sound - Yahoo Finance

The Adyen logo displayed on a smartphone.

Rafael Henrique | SOPA Images | LightRocket via Getty Images

LONDON Adyen, the European fintech giant processing payments for the likes of Facebook, Netflix and Uber, isn't convinced bitcoin can be used as a mainstream form of payment.

Pieter van der Does, the firm's CEO and co-founder, told CNBC that volatility in bitcoin and other cryptocurrencies makes them less attractive for making transactions. He added his firm has no interest in adding crypto as a payment method.

"Bitcoin is more of an investment asset than a payment method," Van der Does said in an interview Wednesday.

"We are interested in payment methods which are being used," he added. "I am wondering if the huge movement in the value of bitcoin is helping it as a payment method."

Tesla announced earlier this week that it had made a $1.5 billion investment in bitcoin, a move that led to speculation as to whether more firms would follow suit. Elon Musk's electric car company said in a filing Monday that it would also start accepting payments in bitcoin in exchange for its products.

Meanwhile, Mastercard said Wednesday that it plans to offer support for some cryptocurrencies on its network this year.

Asked whether Adyen could do the same, Van der Does said his firm's merchants aren't requesting that it adds crypto payment functionality to its platform.

"It might not actually be helping cryptocurrencies if they are more like investment assets than a currency," he said."That makes it less interesting for a merchant to have potential (as a means of payment), you need a stable currency."

Adyen did once let its clients accept bitcoin as a payment option but no longer supports the cryptocurrency.

Cryptocurrencies have been known to be wildly volatile for as long as they've been around. Bitcoin alone has gone through various boom and bust cycles, the most recent of which was a run toward $20,000 in 2017 before a collapse of more than 80% in value the following year.

Bitcoin has made a strong comeback lately, though, soaring past $40,000 to hit record highs on news of Tesla's use of corporate cash to buy bitcoin.

Proponents of bitcoin say it's benefited from an increase in institutional investment. Larger investors are looking to diversify their portfolios and view the digital coin as a potential store of value akin to gold, according to the bulls. Skeptics, meanwhile, fear that bitcoin may be one of the biggest market bubbles in history.

Nonetheless, bitcoin has yet to prove itself as a mainstream form of payment. The bitcoin network has a scalability problem, meaning its transaction processing capacity is much more limited than that of a major network like Visa. There are efforts to to ramp up the use of bitcoin in payments, though.

PayPal is hoping to allow its vast network of merchants to accept bitcoin and other cryptocurrencies as a means of payment, while projects like the so-called Lightning Network aim to speed up bitcoin transaction times.

Founded in 2006, Adyen's platform lets merchants accept online and point-of-sale payments. The Dutch company debuted on the Amsterdam stock exchange in 2018 and has seen its share price more than double since February last year thanks to a boost to e-commerce volumes during the coronavirus pandemic. Adyen competes with the likes of U.S. firm Stripe and British start-up Checkout.com.

Adyen's shares hit a record high Wednesday after the firm posted annual profits that beat expectations. The firm said its business had proven "resilient" in the latter half of 2020 and saw strong gains in its North American operations.

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Fintech giant Adyen says it has no interest in bitcoin as a payment method and clients aren't asking for it - CNBC

Karol Serewis/SOPA Images/LightRocket via Getty Images

The dollar headed for its first losing week in three as new signs of weakness in the U.S. jobs market dented investor expectations about the pace of economic recovery from the pandemic.

Bitcoin hit a new all-time high of $49,000 on Friday after BNY Mellon became the latest firm to embrace cryptocurrencies, saying it will form a new unit to help clients hold, transfer and issue digital assets.

"With names like BONY getting in, it's going to lay the groundwork for even more mainstream adoption of bitcoin," said Jeffrey Wang, head of Americas at crypto finance service provider Amber Group.

"Medium term, the momentum is very strong and the market is going to want to test $50,000."

The dollar remained on the back foot on Friday in Asia, pinned near two-week lows, after the release of weaker-than-expected weekly U.S. jobless claims data the previous day.

That added to recent concerns that the dollar's previous rally had priced in too fast a pace of rebound for the U.S. economy.

The dollar index edged up less than 0.1% to 90.49 in holiday-thinned trade due to the Lunar New Year, and was on track to fall 0.6% for the week.

There has been a divergence in views among traders this year over just how U.S. President Joe Biden's planned $1.9 trillion fiscal stimulus package will affect the dollar.

Some see it as bolstering the currency as it should speed a U.S. recovery relative to other countries, while others reckoned it would feed a global reflation narrative that should lift riskier assets at the dollar's expense.

"The U.S. economy will outperform most thanks to fiscal stimulus and faster vaccine deployment, but ongoing reflationary fiscal and monetary policy will leave DXY on a sustained medium term bear trend," Westpac strategists wrote of the dollar index in a client note.

The euro slipped less than 0.1% to $1.2122, consolidating for a third day near that level as it headed for a 0.6% weekly advance.

The dollar was mostly flat at 104.795 yen , down 0.5% from the end of last week.

Bitcoin last traded 1.7% weaker at $47,170 after trading at a record high of exactly $49,000.00 on Bitstamp.

The world's most popular cryptocurrency is on course for a nearly 22% weekly advance, its biggest since the period ended Jan. 3.

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Dollar headed for weekly loss, bitcoin hits record $49,000 - CNBC

Bloomberg

(Bloomberg) -- Stefan Qin was just 19 when he claimed to have the secret to cryptocurrency trading.Buoyed with youthful confidence, Qin, a self-proclaimed math prodigy from Australia, dropped out of college in 2016 to start a hedge fund in New York he called Virgil Capital. He told potential clients he had developed an algorithm called Tenjin to monitor cryptocurrency exchanges around the world to seize on price fluctuations. A little more than a year after it started, he bragged the fund had returned 500%, a claim that produced a flurry of new money from investors.He became so flush with cash, Qin signed a lease in September 2019 for a $23,000-a-month apartment in 50 West, a 64-story luxury condo building in the financial district with expansive views of lower Manhattan as well as a pool, sauna, steam room, hot tub and golf simulator.In reality, federal prosecutors said, the operation was a lie, essentially a Ponzi scheme that stole about $90 million from more than 100 investors to help pay for Qins lavish lifestyle and personal investments in such high-risk bets as initial coin offerings. At one point, facing client demands for their money, he variously blamed poor cash flow management and loan sharks in China for his troubles. Last week, Qin, now 24 and expressing remorse, pleaded guilty in federal court in Manhattan to a single count of securities fraud.I knew that what I was doing was wrong and illegal, he told U.S. District Judge Valerie E. Caproni, who could sentence him to more than 15 years in prison. I deeply regret my actions and will spend the rest of my life atoning for what I did. I am profoundly sorry for the harm my selfish behavior has caused to my investors who trusted in me, my employees and my family.Eager InvestorsThe case echoes similar cryptocurrency frauds, such as that of BitConnect, promising people double-and triple-digit returns and costing investors billions. Ponzi schemes like that show how investors eager to cash in on a hot market can easily be led astray by promises of large returns. Canadian exchange QuadrigaCX collapsed in 2019 as a result of fraud, causing at least $125 million in losses for 76,000 investors.While regulatory oversight of the cryptocurrency industry is tightening, the sector is littered with inexperienced participants. A number of the 800 or so crypto funds worldwide are run by people with no knowledge of Wall Street or finance, including some college students and recent graduates who launched funds a few years ago.Qins path started in college, too. He had been a math whiz who planned on becoming a physicist, he told a website, DigFin, in a profile published in December, just a week before regulators closed in on him. He described himself on his LinkedIn page as a quant with a deep interest and understanding in blockchain technology.In 2016, he won acceptance into a program for high-potential entrepreneurs at the University of New South Wales in Sydney with a proposal to use blockchain technology to speed up foreign exchange transactions. He also attended the Minerva Schools, a mostly online college based in San Francisco, from August 2016 through December 2017, the school confirmed.Crypto BugHe got the crypto bug after an internship with a firm in China, he told DigFin. His task had been to build a platform between two venues, one in China and the other in the U.S., to allow the firm to arbitrage cryptocurrencies.Convinced he had happened upon a business, Qin moved to New York to found Virgil Capital. His strategy, he told investors, would be to exploit the tendency of cryptocurrencies to trade at different prices at various exchanges. He would be market-neutral, meaning that the firms funds wouldnt be exposed to price movements.And unlike other hedge funds, he told DigFin, Virgil wouldnt charge management fees, taking only fees based on the firms performance. We never try to make easy money, Qin said.By his telling, Virgil got off to a fast start, claiming 500% returns in 2017, which brought in more investors eager to participate. A marketing brochure boasted of 10% monthly returns -- or 2,811% over a three-year period ending in August 2019, legal filings show.His assets got an extra jolt after the Wall Street Journal profiled him in a February 2018 story that touted his skill at arbitraging cryptocurrency. Virgil experienced substantial growth as new investors flocked to the fund, prosecutors said.Missing AssetsThe first cracks appeared last summer. Some investors were becoming increasingly upset about missing assets and incomplete transfers, the former head of investor relations, Melissa Fox Murphy, said in a court declaration. (She left the firm in December.) The complaints grew.It is now MID DECEMBER and my MILLION DOLLARS IS NOWHERE TO BE SEEN, wrote one investor, whose name was blacked out in court documents. Its a disgrace the way you guys are treating one of your earliest and largest investors.Around the same time, nine investors with $3.5 million in funds asked for redemptions from the firms flagship Virgil Sigma Fund LP, according to prosecutors. But there was no money to transfer. Qin had drained the Sigma Fund of its assets. The funds balances were fabricated.Instead of trading at 39 exchanges around the world, as he had claimed, Qin spent investor money on personal expenses and to invest in other undisclosed high-risk investments, including initial coin offerings, prosecutors said.So Qin tried to stall. He convinced investors instead to transfer their interests into his VQR Multistrategy Fund, another cryptocurrency fund he started in February 2020 that used a variety of trading strategies -- and still had assets.Loan SharksHe also sought to withdraw $1.7 million from the VQR fund, but that aroused suspicions from the head trader, Antonio Hallak. In a phone call Hallak recorded in December, Qin said he needed the money to repay loan sharks in China that he had borrowed from to start his business, according to court filings in a lawsuit filed by the Securities and Exchange Commission. He said the loan sharks might do anything to collect on the debt and that he had a liquidity issue that prevented him from repaying them.I just had such poor cash flow management to be honest with you, Qin told Hallak. I dont have money right now dude. Its so sad.When the trader balked at the withdrawal, Qin attempted to take over the reins of VQRs accounts. But by now the SEC was involved. It got cryptocurrency exchanges to put a hold on VQRs remaining assets and, a week later, filed suit.Asset RecoveryBy the end, Qin had drained virtually all of the money that was in the Sigma Fund. A court-appointed receiver who is overseeing the fund is looking to recover assets for investors, said Nicholas Biase, a spokesman for Manhattan U.S. Attorney Audrey Strauss. About $24 million in assets in the VQR fund was frozen and should be available to disperse, he said.Stefan He Qin drained almost all of the assets from the $90 million cryptocurrency fund he owned, stealing investors money, spending it on indulgences and speculative personal investments, and lying to investors about the performance of the fund and what he had done with their money, Strauss said in a statement.In South Korea when he learned of the probe, Qin agreed to fly back to the U.S., prosecutors said. He surrendered to authorities on Feb. 4, pleaded guilty the same day before Caproni, and was freed on a $50,000 bond pending his sentencing, scheduled for May 20. While the maximum statutory penalty calls for 20 years in prison, as part of a plea deal, prosecutors agreed that he should get 151 to 188 months behind bars under federal sentencing guidelines and a fine of up to $350,000.That fate is a far cry from the career his parents had envisioned for him -- a physicist, he had told DigFin. They werent too happy when I told them I had quit uni to do this crypto thing. Who knows, maybe someday Ill complete my degree. But what I really want to do is trade crypto.The case is U.S. v Qin, 21-cr-75, U.S. District Court, Southern District of New York (Manhattan)(Updates with comment from prosecutor and case caption)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.2021 Bloomberg L.P.

Originally posted here:
7 public companies with exposure to bitcoin - Yahoo Finance

Bloomberg

(Bloomberg) -- Stefan Qin was just 19 when he claimed to have the secret to cryptocurrency trading.Buoyed with youthful confidence, Qin, a self-proclaimed math prodigy from Australia, dropped out of college in 2016 to start a hedge fund in New York he called Virgil Capital. He told potential clients he had developed an algorithm called Tenjin to monitor cryptocurrency exchanges around the world to seize on price fluctuations. A little more than a year after it started, he bragged the fund had returned 500%, a claim that produced a flurry of new money from investors.He became so flush with cash, Qin signed a lease in September 2019 for a $23,000-a-month apartment in 50 West, a 64-story luxury condo building in the financial district with expansive views of lower Manhattan as well as a pool, sauna, steam room, hot tub and golf simulator.In reality, federal prosecutors said, the operation was a lie, essentially a Ponzi scheme that stole about $90 million from more than 100 investors to help pay for Qins lavish lifestyle and personal investments in such high-risk bets as initial coin offerings. At one point, facing client demands for their money, he variously blamed poor cash flow management and loan sharks in China for his troubles. Last week, Qin, now 24 and expressing remorse, pleaded guilty in federal court in Manhattan to a single count of securities fraud.I knew that what I was doing was wrong and illegal, he told U.S. District Judge Valerie E. Caproni, who could sentence him to more than 15 years in prison. I deeply regret my actions and will spend the rest of my life atoning for what I did. I am profoundly sorry for the harm my selfish behavior has caused to my investors who trusted in me, my employees and my family.Eager InvestorsThe case echoes similar cryptocurrency frauds, such as that of BitConnect, promising people double-and triple-digit returns and costing investors billions. Ponzi schemes like that show how investors eager to cash in on a hot market can easily be led astray by promises of large returns. Canadian exchange QuadrigaCX collapsed in 2019 as a result of fraud, causing at least $125 million in losses for 76,000 investors.While regulatory oversight of the cryptocurrency industry is tightening, the sector is littered with inexperienced participants. A number of the 800 or so crypto funds worldwide are run by people with no knowledge of Wall Street or finance, including some college students and recent graduates who launched funds a few years ago.Qins path started in college, too. He had been a math whiz who planned on becoming a physicist, he told a website, DigFin, in a profile published in December, just a week before regulators closed in on him. He described himself on his LinkedIn page as a quant with a deep interest and understanding in blockchain technology.In 2016, he won acceptance into a program for high-potential entrepreneurs at the University of New South Wales in Sydney with a proposal to use blockchain technology to speed up foreign exchange transactions. He also attended the Minerva Schools, a mostly online college based in San Francisco, from August 2016 through December 2017, the school confirmed.Crypto BugHe got the crypto bug after an internship with a firm in China, he told DigFin. His task had been to build a platform between two venues, one in China and the other in the U.S., to allow the firm to arbitrage cryptocurrencies.Convinced he had happened upon a business, Qin moved to New York to found Virgil Capital. His strategy, he told investors, would be to exploit the tendency of cryptocurrencies to trade at different prices at various exchanges. He would be market-neutral, meaning that the firms funds wouldnt be exposed to price movements.And unlike other hedge funds, he told DigFin, Virgil wouldnt charge management fees, taking only fees based on the firms performance. We never try to make easy money, Qin said.By his telling, Virgil got off to a fast start, claiming 500% returns in 2017, which brought in more investors eager to participate. A marketing brochure boasted of 10% monthly returns -- or 2,811% over a three-year period ending in August 2019, legal filings show.His assets got an extra jolt after the Wall Street Journal profiled him in a February 2018 story that touted his skill at arbitraging cryptocurrency. Virgil experienced substantial growth as new investors flocked to the fund, prosecutors said.Missing AssetsThe first cracks appeared last summer. Some investors were becoming increasingly upset about missing assets and incomplete transfers, the former head of investor relations, Melissa Fox Murphy, said in a court declaration. (She left the firm in December.) The complaints grew.It is now MID DECEMBER and my MILLION DOLLARS IS NOWHERE TO BE SEEN, wrote one investor, whose name was blacked out in court documents. Its a disgrace the way you guys are treating one of your earliest and largest investors.Around the same time, nine investors with $3.5 million in funds asked for redemptions from the firms flagship Virgil Sigma Fund LP, according to prosecutors. But there was no money to transfer. Qin had drained the Sigma Fund of its assets. The funds balances were fabricated.Instead of trading at 39 exchanges around the world, as he had claimed, Qin spent investor money on personal expenses and to invest in other undisclosed high-risk investments, including initial coin offerings, prosecutors said.So Qin tried to stall. He convinced investors instead to transfer their interests into his VQR Multistrategy Fund, another cryptocurrency fund he started in February 2020 that used a variety of trading strategies -- and still had assets.Loan SharksHe also sought to withdraw $1.7 million from the VQR fund, but that aroused suspicions from the head trader, Antonio Hallak. In a phone call Hallak recorded in December, Qin said he needed the money to repay loan sharks in China that he had borrowed from to start his business, according to court filings in a lawsuit filed by the Securities and Exchange Commission. He said the loan sharks might do anything to collect on the debt and that he had a liquidity issue that prevented him from repaying them.I just had such poor cash flow management to be honest with you, Qin told Hallak. I dont have money right now dude. Its so sad.When the trader balked at the withdrawal, Qin attempted to take over the reins of VQRs accounts. But by now the SEC was involved. It got cryptocurrency exchanges to put a hold on VQRs remaining assets and, a week later, filed suit.Asset RecoveryBy the end, Qin had drained virtually all of the money that was in the Sigma Fund. A court-appointed receiver who is overseeing the fund is looking to recover assets for investors, said Nicholas Biase, a spokesman for Manhattan U.S. Attorney Audrey Strauss. About $24 million in assets in the VQR fund was frozen and should be available to disperse, he said.Stefan He Qin drained almost all of the assets from the $90 million cryptocurrency fund he owned, stealing investors money, spending it on indulgences and speculative personal investments, and lying to investors about the performance of the fund and what he had done with their money, Strauss said in a statement.In South Korea when he learned of the probe, Qin agreed to fly back to the U.S., prosecutors said. He surrendered to authorities on Feb. 4, pleaded guilty the same day before Caproni, and was freed on a $50,000 bond pending his sentencing, scheduled for May 20. While the maximum statutory penalty calls for 20 years in prison, as part of a plea deal, prosecutors agreed that he should get 151 to 188 months behind bars under federal sentencing guidelines and a fine of up to $350,000.That fate is a far cry from the career his parents had envisioned for him -- a physicist, he had told DigFin. They werent too happy when I told them I had quit uni to do this crypto thing. Who knows, maybe someday Ill complete my degree. But what I really want to do is trade crypto.The case is U.S. v Qin, 21-cr-75, U.S. District Court, Southern District of New York (Manhattan)(Updates with comment from prosecutor and case caption)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.2021 Bloomberg L.P.

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Not Just Bitcoin, Paypal's Vision Involves Central Bank Digital Currencies Too: What You Need To Know - Yahoo Finance

Bloomberg

(Bloomberg) -- Stefan Qin was just 19 when he claimed to have the secret to cryptocurrency trading.Buoyed with youthful confidence, Qin, a self-proclaimed math prodigy from Australia, dropped out of college in 2016 to start a hedge fund in New York he called Virgil Capital. He told potential clients he had developed an algorithm called Tenjin to monitor cryptocurrency exchanges around the world to seize on price fluctuations. A little more than a year after it started, he bragged the fund had returned 500%, a claim that produced a flurry of new money from investors.He became so flush with cash, Qin signed a lease in September 2019 for a $23,000-a-month apartment in 50 West, a 64-story luxury condo building in the financial district with expansive views of lower Manhattan as well as a pool, sauna, steam room, hot tub and golf simulator.In reality, federal prosecutors said, the operation was a lie, essentially a Ponzi scheme that stole about $90 million from more than 100 investors to help pay for Qins lavish lifestyle and personal investments in such high-risk bets as initial coin offerings. At one point, facing client demands for their money, he variously blamed poor cash flow management and loan sharks in China for his troubles. Last week, Qin, now 24 and expressing remorse, pleaded guilty in federal court in Manhattan to a single count of securities fraud.I knew that what I was doing was wrong and illegal, he told U.S. District Judge Valerie E. Caproni, who could sentence him to more than 15 years in prison. I deeply regret my actions and will spend the rest of my life atoning for what I did. I am profoundly sorry for the harm my selfish behavior has caused to my investors who trusted in me, my employees and my family.Eager InvestorsThe case echoes similar cryptocurrency frauds, such as that of BitConnect, promising people double-and triple-digit returns and costing investors billions. Ponzi schemes like that show how investors eager to cash in on a hot market can easily be led astray by promises of large returns. Canadian exchange QuadrigaCX collapsed in 2019 as a result of fraud, causing at least $125 million in losses for 76,000 investors.While regulatory oversight of the cryptocurrency industry is tightening, the sector is littered with inexperienced participants. A number of the 800 or so crypto funds worldwide are run by people with no knowledge of Wall Street or finance, including some college students and recent graduates who launched funds a few years ago.Qins path started in college, too. He had been a math whiz who planned on becoming a physicist, he told a website, DigFin, in a profile published in December, just a week before regulators closed in on him. He described himself on his LinkedIn page as a quant with a deep interest and understanding in blockchain technology.In 2016, he won acceptance into a program for high-potential entrepreneurs at the University of New South Wales in Sydney with a proposal to use blockchain technology to speed up foreign exchange transactions. He also attended the Minerva Schools, a mostly online college based in San Francisco, from August 2016 through December 2017, the school confirmed.Crypto BugHe got the crypto bug after an internship with a firm in China, he told DigFin. His task had been to build a platform between two venues, one in China and the other in the U.S., to allow the firm to arbitrage cryptocurrencies.Convinced he had happened upon a business, Qin moved to New York to found Virgil Capital. His strategy, he told investors, would be to exploit the tendency of cryptocurrencies to trade at different prices at various exchanges. He would be market-neutral, meaning that the firms funds wouldnt be exposed to price movements.And unlike other hedge funds, he told DigFin, Virgil wouldnt charge management fees, taking only fees based on the firms performance. We never try to make easy money, Qin said.By his telling, Virgil got off to a fast start, claiming 500% returns in 2017, which brought in more investors eager to participate. A marketing brochure boasted of 10% monthly returns -- or 2,811% over a three-year period ending in August 2019, legal filings show.His assets got an extra jolt after the Wall Street Journal profiled him in a February 2018 story that touted his skill at arbitraging cryptocurrency. Virgil experienced substantial growth as new investors flocked to the fund, prosecutors said.Missing AssetsThe first cracks appeared last summer. Some investors were becoming increasingly upset about missing assets and incomplete transfers, the former head of investor relations, Melissa Fox Murphy, said in a court declaration. (She left the firm in December.) The complaints grew.It is now MID DECEMBER and my MILLION DOLLARS IS NOWHERE TO BE SEEN, wrote one investor, whose name was blacked out in court documents. Its a disgrace the way you guys are treating one of your earliest and largest investors.Around the same time, nine investors with $3.5 million in funds asked for redemptions from the firms flagship Virgil Sigma Fund LP, according to prosecutors. But there was no money to transfer. Qin had drained the Sigma Fund of its assets. The funds balances were fabricated.Instead of trading at 39 exchanges around the world, as he had claimed, Qin spent investor money on personal expenses and to invest in other undisclosed high-risk investments, including initial coin offerings, prosecutors said.So Qin tried to stall. He convinced investors instead to transfer their interests into his VQR Multistrategy Fund, another cryptocurrency fund he started in February 2020 that used a variety of trading strategies -- and still had assets.Loan SharksHe also sought to withdraw $1.7 million from the VQR fund, but that aroused suspicions from the head trader, Antonio Hallak. In a phone call Hallak recorded in December, Qin said he needed the money to repay loan sharks in China that he had borrowed from to start his business, according to court filings in a lawsuit filed by the Securities and Exchange Commission. He said the loan sharks might do anything to collect on the debt and that he had a liquidity issue that prevented him from repaying them.I just had such poor cash flow management to be honest with you, Qin told Hallak. I dont have money right now dude. Its so sad.When the trader balked at the withdrawal, Qin attempted to take over the reins of VQRs accounts. But by now the SEC was involved. It got cryptocurrency exchanges to put a hold on VQRs remaining assets and, a week later, filed suit.Asset RecoveryBy the end, Qin had drained virtually all of the money that was in the Sigma Fund. A court-appointed receiver who is overseeing the fund is looking to recover assets for investors, said Nicholas Biase, a spokesman for Manhattan U.S. Attorney Audrey Strauss. About $24 million in assets in the VQR fund was frozen and should be available to disperse, he said.Stefan He Qin drained almost all of the assets from the $90 million cryptocurrency fund he owned, stealing investors money, spending it on indulgences and speculative personal investments, and lying to investors about the performance of the fund and what he had done with their money, Strauss said in a statement.In South Korea when he learned of the probe, Qin agreed to fly back to the U.S., prosecutors said. He surrendered to authorities on Feb. 4, pleaded guilty the same day before Caproni, and was freed on a $50,000 bond pending his sentencing, scheduled for May 20. While the maximum statutory penalty calls for 20 years in prison, as part of a plea deal, prosecutors agreed that he should get 151 to 188 months behind bars under federal sentencing guidelines and a fine of up to $350,000.That fate is a far cry from the career his parents had envisioned for him -- a physicist, he had told DigFin. They werent too happy when I told them I had quit uni to do this crypto thing. Who knows, maybe someday Ill complete my degree. But what I really want to do is trade crypto.The case is U.S. v Qin, 21-cr-75, U.S. District Court, Southern District of New York (Manhattan)(Updates with comment from prosecutor and case caption)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.2021 Bloomberg L.P.

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The Grayscale Bitcoin Trust: What It Is and How It Works - Yahoo Finance

The wonderful thing about bitcoin is many of its apparent benefits, like the ability to be anonymously owned and securely transferred, are also the things that often create situations like this: police in Germany have seized more than 50 million ($60 million) in bitcoin, but they cant access any of it because, as Reuters reports, the person they took it from wont tell them his password.

The man in question was sentenced and has served his time in jail for covertly installing bitcoin mining software on peoples computers, but throughout the entire process, he never shared a peep about how German authorities should get in. We asked him but he didnt say is the explanation Reuters was offered by a prosecutor. It presents a big, and probably obvious, question: can you really seize something, particularly money, that you cant access or use?

The even more glaring issue is how often passwords, PINs, and their collective absence pop up in stories about bitcoin, illegal or otherwise. There was a recent story in The New York Times about a programmer with his own bitcoin fortune locked away in a secure hard drive that revealed an amazing statistic: around 20 percent of bitcoin in existence today (totaling around $140 billion) are completely lost or locked up in wallets with lost passwords, meaning theyre completely inaccessible.

So maybe this German bitcoin enthusiast is sticking it to the people who had him locked up, or maybe hes simply forgotten his password. Reuters reports that prosecutors have ensured the man cannot access [his] largesse but if they cant access it either, I think its safe to say that pile of lost bitcoin just got a bit larger.

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A German man is keeping $60 million in bitcoin from police by never revealing his password - The Verge

JERSEY CITY, N.J., Feb. 9, 2021 /PRNewswire/ --BlockFiInc. ("BlockFi"), a financial services company dedicated to building a bridge between cryptocurrencies and traditional financial and wealth management products, today announced the launch of the BlockFi Bitcoin Trust ("the Trust"), an investment vehicle for investors seeking access to Bitcoin ("BTC"), the leading digital asset. The entry of the Trust into the market will provide investors with an alternative, more cost-effective entry point to the crypto market compared with similar existing products.

Investment trusts are among the most popular methods for major institutions to invest in BTC. The Trust will issue shares via private placements, and the investment objective of the Trust is for the value of the shares to reflect the value of BTC held by the Trust less the Trust's expenses and other liabilities. Trust shares will be available to global institutions and other qualified investors in the near-term, and later this eligibility will be expanded to include accredited individual investors in the U.S.

Initial subscribers to the Trust are expected to include BlockFi and select institutional investors, using BTC to subscribe. Upon the expiration of an initial lockup, shares may become available for secondary investment on a wide range of recognized brokerage platforms.

As sponsor of the Trust, BlockFi Management LLC, a wholly owned subsidiary of BlockFi, will charge a sponsor fee of 1.75%. BTC held in the Trust will be custodied by Fidelity Digital Assets Services, LLC ("Fidelity Digital Assets") through an enterprise-grade custody solution purpose-built for institutional investments. Davis Polk & Wardwell LLP is legal counsel to BlockFi in connection with the Trust, with Coin Metrics Inc. providing index and pricing data and Grant Thornton LLP serving as financial statement auditor.

"Given the level of institutional activity in recent months and demand for new, professional-grade investment vehicles, the timing of BlockFi Bitcoin Trust is ideal," said Zac Prince, Founder & CEO of BlockFi. "As we work to broaden the availability of this vehicle to retail brokerages, we expect this product will facilitate greater investments in digital assets - at the core of BlockFi's mission in bridging crypto with traditional finance."

"We believe a trust structure for this product is beneficial for investors and will play an important role in improving access in this nascent market," added Yevgeniy Feldman, Vice President for Institutional Services at BlockFi. "The BlockFi Bitcoin Trust can more easily meet rapidly growing demands from the public to invest in digital assets, and our decision to custody the Trust's holdings with Fidelity Digital Assets will help give shareholders peace-of-mind in the security of their investments."

"The digital asset ecosystem has grown significantly in recent years, creating an even more robust marketplace for investors and accelerating demand among institutions," said Christine Sandler, Head of Sales and Marketing for Fidelity Digital Assets. "An increasingly wide range of investors seeking access to Bitcoin has emphasized the need for a more diversified set of products offering exposure to the asset. Like BlockFi, we believe pairing innovative products with institutional-grade solutions that provide high caliber security will help enable broader adoption of digital assets."

For additional information, interested investors can visit: https://www.BlockFiTrust.com

Legal Disclaimers:

Investors should carefully consider the investment objectives and risks as well as fees and expenses of the Trust before investing. More information can be found in the Trust's Private Placement Memorandum. Read the Private Placement Memorandum carefully before investing.

Nothing contained in this announcement should be construed as a solicitation of an offer to buy or offer, or recommendation, to acquire or dispose of any security, commodity, investment or to engage in any other transaction.The information provided in this announcement is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation. This announcement is not directed to any person in any jurisdiction where the publication or availability of the announcement is prohibited, by reason of that person's nationality, residence or otherwise.

Investments in the Trust involve risk and the value of the Trust's shares could go down.

Neither BlockFi nor any of its affiliates or representatives provide legal, tax or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.

Media Contact for BlockFi:

Ryan DicovitskyDukas Linden Public Relations[emailprotected]

About BlockFi

BlockFi is a new breed of financial services company. Founded in 2017 by Zac Prince and Flori Marquez, BlockFi is building a bridge between cryptocurrencies and traditional financial and wealth management products to advance the overall digital asset ecosystem for individual and institutional investors. BlockFi's platform manages more than $8 billion in assets and has generated tens of millions in interest for clients. The company, headquartered in New Jersey with offices around the globe, continues to expand its presence in the United States and internationally.

About Fidelity Digital Assets

Fidelity Digital Assets offers a full-service enterprise-grade platform for securing, trading and supporting digital assets. A business of Fidelity Investments, one of the world's largest and most diversified financial services providers with more than $9.8 trillion in client assets under administration as of December 31, 2020, Fidelity Digital Assets combines the operational and technical capabilities of the broader Fidelity organization with dedicated blockchain expertise to deliver a completely new offering for institutional investors. Learn more at http://fidelitydigitalassets.com.

Fidelity Digital AssetsSM("Fidelity") is an independent company, unaffiliated with BlockFi. Fidelity is a service provider to BlockFi. There is no form of legal partnership agency affiliation, or similar relationship between the BlockFi and Fidelity, nor is such a relationship created or implied by the information herein.

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BlockFi Launches the BlockFi Bitcoin Trust - PRNewswire - PRNewswire