Firm With Ties To Former Sheriff Of Wall Street Discloses $140 Million Bitcoin Fund – Forbes

Andrew Cuomo, then attorney general for New York state, center, and Benjamin Lawsky, then assistant ... [+] U.S. attorney, left, and Eric Corngold, then-deputy attorney general for Economic Justice, hold a 2008 news conference on Wall Street in New York.

New York Digital Investment Group (NYDIG) today disclosed it has sold nearly $140 million in a previously unknown bitcoin fund. The New York Company, granted a BitLicense from the state in 2018, revealed the fund in a Form D filing for exemption to the U.S. Securities and Exchange Commission dated today.

Formally called the NYDIG Bitcoin Yield Enhancement Fund LP, the fund began selling just a week ago, on May 5, according to the documents. Described as a pooled investment fund, meaning multiple investors participated in the capital raise, the investment group requested its exemption under Rule 506(b) of the Regulation D safe harbor protections established in 2013.

While little is known about the new yield enhancement fund, an earlier NYDIG investment called the Bitcoin Strategy Fund was advised by Stone Ridge Asset Management LLC, a $15 billion advisor with ties to Ben Lawsky, who created the same BitLicense granted to NYDIG and who formerly served as co-chair of New York Governor Andrew Cuomo's Cyber Security Advisory Board. Forbes has reached out to both NYDIG and Stone Ridge for comment.

Lawsky, who was previously New York State's superintendent of financial services, is listed as Stone Ridges head of Regulatory Affairs. He became known as the Sheriff of Wall Street, after issuing $6 billion in fines to financial institutions during his tenure starting in May 2011. In June 2015 Lawsky left his state post and the following month formally launched the Lawsky Group, to advise those navigating financial services regulation. While the Lawsky Group has been largely quiet over the years, Lawsky spoke out shortly after the companys formation to deny any conflict of interest.

While Lawsky still lists his title as CEO of Lawsky Group on LinkedIn, it remains unclear when exactly he joined Stone Ridge. Stone Ridge was founded in 2012 to provide investors with alternative risk exposures in reinsurance, volatility, and alternative lending. In December 2019, the SEC approved the NYDIG Bitcoin Strategy Fund, a portfolio fund in the Stone Ridge Trust VI, for cash-settled bitcoin futures contracts advised by Stone Ridge. At the time of publication, it is unclear whether or not Stone Ridge is also advising the newly revealed fund.

However, the connections remain strong. Stone Ridge co-founder Robert Gutmann is listed as the CEO of NYDIG Execution LLC in a 2018 statement from the New York Department of financial services, approving the firms application for a BitLicense and for its subsidiary NYDIG Trust Company LLC to operate as a limited purpose trust company. NYDIGs site says it builds and manages custom funds and serves as a qualified custodian of bitcoin, ether, XRP, litecoin, and bitcoin cash.

News of the new bitcoin fund comes amid a number of recent developments showing increased comfort on behalf of the financial establishment with the alternative asset. Today the Wall Street Journal reported that JP Morgan had opened its first two bank accounts for cryptocurrency exchanges Coinbase and Gemini. Last week, investment firm 3iQ announced it had raised $48 million for an exchange-traded product on the Toronto Stock Exchange.

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Firm With Ties To Former Sheriff Of Wall Street Discloses $140 Million Bitcoin Fund - Forbes