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‘I don’t own Bitcoin, but I should’ — legendary investor Druckenmiller

October 31, 2023 Coin Telegraph

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Veteran investor Stanley Druckenmiller praised Bitcoin for establishing its own “brand” during an interview with hedge fund manager Paul Tudor Jones.

Billionaire investor Stanley Druckenmiller praised Bitcoin (BTC) for establishing a “brand” over last decade and half — admitting while he doesn’t own any Bitcoin, he ought to.

The billionaire shared his latest thoughts on Bitcoin in an Oct. 30 interview with hedge fund manager Paul Tudor Jones, where he made comparisons between Bitcoin and gold as a store of value.

“I’m 70 years old, I own gold. I was surprised that bitcoin got going, but you know, it’s clear that the young people look at it as a store of value because it’s a lot easier to do stuff with. 17 years, to me, it’s a brand. I like gold because it’s a 5,000-year-old brand.” He added:

“So, I like them both. I don’t own any Bitcoin to be frank, but I should.”

Stanley Druckenmiller is one of the most successful hedge fund managers on Wall Street and is worth $6,200,000,000.

He says, “Young people look at #bitcoin as a store of value. It’s a brand. I like it. I dont own any, but I should”pic.twitter.com/DXjrnvE1Qc
— Documenting ₿itcoin (@DocumentingBTC) October 30, 2023

Druckenmiller previously held Bitcoin. However in a September 2022 interview, he revealed he had sold it in light of central banks imposing tightening measures.

He did, however, say the digital asset sector would flourish in the event that people lose faith in the central banking system, making an example of the Bank of England after the British pound plummeted in mid-2022.

“I could see cryptocurrency having a big role in a Renaissance because people just aren’t going to trust the central banks."

Druckenmiller founded Duquesne Capital Management in 1981 and closed the fund in 2010. During that time, he achieved an average annual return of 30% and never experienced a down year.

His investment philosophy revolved around holding a group of stocks long, a group of stocks short and using leverage to trade futures in times of rising and falling markets.

He’s also praised blockchain technology, predicting that a ledger-based system could replace the U.S. dollar as the world’s reserve currency in the future.

In 2021, Druckenmiller said Ethereum is like “Myspace before Facebook” and predicted that Ether (ETH) would eventually flip BTC.

Bitcoin’s sentiment from Wall Street firms has warmed up over the last year, most notably evidenced by a wave of propsed Bitcoin exchange-traded fund filings from major financial firms.

The cryptocurrency industry still has its fair share of critics though.

Charlie Munger has called bitcoin Rat Poison.

Warren Buffett has called it Rat Poison Squared.

But here's the thing.

If Rat Poison is a BIG *negative* (eg, -1,000,000), shouldn't Rat Poison Squared be an EVEN BIGGER *positive* (eg, +1,000,000,000,000)?

It's just math, folks! pic.twitter.com/UYobxYU08L
— 10-K Diver (@10kdiver) July 2, 2021

Other well-known veteran investors Warren Buffet and Charlie Munger have long referred to Bitcoin and cryptocurrencies “rat poison” and an asset class which produces no value.

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Alameda Research lost $190M to scams and ‘questionable’ blockchains: Whistleblower

October 12, 2023 Coin Telegraph

Alameda Research lost 0M to scams and ‘questionable’ blockchains: Whistleblower

Coin Telegraph

Former Alameda Research engineer Aditya Baradwaj says one trader lost more than $100 million after clicking on a fake link.

FTX’s sister hedge fund, Alameda Research, lost at least $190 million of its trading funds due to arguably avoidable scams, according to a former engineer at the firm.

In an Oct. 12 post to X titled “The Hacks,” former Alameda Research engineer turned whistleblower Aditya Baradwaj claims that the firm’s “breathtaking” agility led to “major security incidents” as often as every few months.

Incident #1:

An Alameda trader got phished while trying to complete a DeFi transaction by accidentally clicking a fake link that had been promoted to the top of Google Search results

Cost: $100M+

Postmortem: Implemented extra checks on our internal wallet software
— Adi (e/acc) (@aditya_baradwaj) October 11, 2023

In an example of one of the biggest exploits, Baradwaj claims a trader at Alameda once lost more than $100 million of the firm’s funds after clicking a malicious link promoted to the top of Google Search results.

The trader was attempting to sign off on a decentralized finance transaction, said Baradwaj.

In another example, he said Alameda was yield farming on a new blockchain of “questionable legitimacy” — a move that saw the trading firm eventually rack up losses of more than $40 million.

Baradwaj wrote that FTX founder Sam Bankman-Fried believed that the “single most important thing” for Alameda and FTX was their ability to move quickly. This ethos led to Alameda routinely ignoring industry-standard engineering and accounting practices for such firms, he said.

“This meant virtually no code testing and incomplete balance accounting. Safety checks for trading would only be added on an as-needed basis,” wrote Baradwaj.

“Blockchain private keys and exchange API keys were stored in plaintext in a file that several employees could access.”

This led to another security incident that cost the firm millions after an old version of the plaintext files containing keys to Alameda’s wallets were leaked.

The attacker transferred funds out of “some exchanges,” and the incurred losses tallied up to more than $50 million, explained Baradwaj.

These are just a few incidents - there's many more, including from before my time at the company.

FTX had its own issues, including the MobileCoin fiasco that Gary recently testified about during the trial.
— Adi (e/acc) (@aditya_baradwaj) October 11, 2023

He said that Alameda suffered through “many more” incidents of similar scope to the ones he’d described, but many of these were before his time at the company.

The former engineer has been speaking publicly about the many faults of Alameda and FTX in the wake of their collapse in November last year, telling Cointelegraph how its founder, Sam Bankman-Fried, justified many of his “ridiculous” actions under the guise of an idealistic philosophy known as Effective Altruism.

Baradwaj’s comments come amid former Alameda CEO Caroline Ellison taking the stand to testify against Bankman-Fried on the sixth day of his fraud trial. In the preceding days, a number of former colleagues, including Adam Yedidia and Gary Wang, have brought a wealth of new evidence against the former billionaire.

Wang has admitted to writing in specific code that allowed for Alameda to trade with a near-unlimited line of credit from FTX, while Caroline Ellison has explained the intricate details of FTX’s alleged commingling of funds with Alameda.

Bankman-Fried has pled not guilty to the charges brought against him and maintains his innocence in the ongoing trial.

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3AC’s Su Zhu arrested in Singapore

September 29, 2023 Coin Telegraph

Coin Telegraph

Su Zhu was arrested at Singapore Changi Airport while attempting to leave the country after a court granted a committal order.

The co-founder of Three Arrows Capital (3AC), Su Zhu, was arrested in Singapore when attempting to leave the country, Cointelegraph has learned from Teneo, the joint liquidator of the bankrupt hedge fund.

In a statement, Teneo announced that Zhu “was apprehended at Changi Airport whilst attempting to travel out of Singapore following a committal order granted by the Singapore Courts against him.“

A committal order is used to send someone to prison for contempt of court. On September 25, Teneo was granted its committal request in Singapore, claiming Zhu failed "to comply with a court order".

The investigation is related to efforts to recover funds for creditors of 3AC. The $10 billion hedge fund collapsed in 2022 following the implosion of the Terra ecosystem. 3AC had excessive leverage on long positions across a sort of cryptocurrencies, and borrowed hundreds of millions of dollars from crypto lending protocol.

Since its failure, co-founders Zhu and Kyle Davies have been on the run from liquidators, although very active on social media. The committal order granted in Singapore sentenced Zhu to four months’ imprisonment. A similar committal order was granted against Davies, said Teneo.

"As a result, Mr Zhu will be held in prison to serve his sentence of 4 months under the committal order, during which time the liquidators will seek to engage with him on matters relating to 3AC, focusing on the recovery of assets that are either the property of 3AC or that have been acquired using 3AC’s funds. The liquidators will pursue all opportunities to ensure Mr Zhu complies in full with the court order made against him for provision of information and documents relating to 3AC and its former investment manager during the course of his imprisonment and thereafter, and may make applications for further court orders as required."

Davies’ whereabouts remain unknown. The Monetary Authority of Singapore prohibited Zhu and Davies from conducting regulated investment activity for nine years each.

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3AC co-founder rejects jurisdiction of bankruptcy court, claiming he renounced US citizenship

August 1, 2023 Coin Telegraph

Bankruptcy

As Singapore does not allow dual nationality, 3AC co-founder Kyle Davies said he chose to renounce his U.S. citizenship after getting married and receiving permanent residency.

Kyle Davies, the co-founder of bankrupt crypto hedge fund Three Arrows Capital (3AC), has submitted documentation to court claiming he is fully a citizen of Singapore and not the United States.

In an Aug. 1 filing with U.S. Bankruptcy Court for the Southern District of New York, Davies provided notarized and Apostilled copies of the form applying for the renunciation of his U.S. citizenship on Dec. 15, 2020. He claimed to have received citizenship to Singapore following the issuance of a passport in January 2021 and was not “subjecting [him]self to, or accepting the jurisdiction of, the Courts in the United States.”

Court filings showed Davies renounced his citizenship at the U.S. Embassy in Singapore, citing his decision to live in the country long-term. He said he got married in 2017 to a Singaporean national, gained permanent residency, and has two children in the country. As Singapore does not allow dual nationality, he chose to renounce his U.S. citizenship.

*Notarized and Apostilled documentation of Kyle Davies renouncing his U.S. citizenship in December 2020. Source: U.S. Bankruptcy Court for the Southern District of New York*

The filing from Davies followed a subpoena issued at the request of 3AC liquidators aimed at gaining information on the collapse of the crypto hedge fund. Both Davies and 3AC co-founder Su Zhu were subpoenaed on Twitter — now X — in January due to their physical whereabouts being unknown, but parties have argued Davies should be held in contempt of court after he ignored the order. Zhu, a Singaporean national, would likely not be subject to the subpoena if residing outside the United States.

“Davies has not been, and cannot be, validly served with process as a non-party in this case because he has not been a United States citizen or resident since well before this case was commenced,” said an Aug. 1 filing. “Since Davies has not been validly served, the Court does not have personal jurisdiction over him. The Service Order and Compel Order were premised on the incorrect presumption that Davies is a U.S. citizen, and therefore they should be vacated.”

The whereabouts of both Zhu and Davies following the bankruptcy filing for 3AC in July 2022 has been the subject of mass speculation and debate among crypto users affected by the market crash. Lawyers have appeared before the bankruptcy court on Davies’ behalf, but the revelation of his lack of U.S. citizenship could complicate legal proceedings. The bankruptcy court will hold a hearing on Aug. 8 to discuss the matter.

Liquidators behind 3AC are seeking to recover roughly $1.3 billion in funds from Zhu and Davies, with the firm reportedly owing creditors $3.5 billion. Amid online ire surrounding the events leading to the collapse of 3AC, Zhu and Davies launched a platform for trading claims against bankrupt crypto firms called Open Exchange. Sotheby’s has also auctioned off several pieces from a nonfungible token collection formerly owned by the 3AC founders.

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PwC hedge fund survey finds crypto remains viable despite recent market turmoil

July 12, 2023 Coin Telegraph

Bitcoin Price

The portion of traditional hedge funds investing in crypto fell, but many of those still in the market plan to increase crypto investing this year.

PwC released its fifth annual global crypto hedge fund report on July 12 based on surveys of crypto-native and traditional hedge funds conducted in the first quarter of 2023. Against the backdrop of the recent crypto winter and continuing regulatory uncertainty in the United States and elsewhere, the report found a rather positive outlook among the funds.

Crypto-native hedge funds are “working towards achieving a new industry dynamic which centres around rebuilding confidence and making their needs heard,” and nearly all of them (93%) expect the market cap to rise over the year, the report found. The majority of them (53%) reported no exposure to FTX or the Terra Luna ecosystem.

imagine paying your crypto hf 2% comish on this performance

per pwc 5th annual hf report pic.twitter.com/TJk1cf7CKw
— Monty (@MontyHall_) July 12, 2023

Most of the funds performed better than the price of Bitcoin (BTC) in 2022. The report found:

“Crypto hedge funds remain popular investment vehicles for investors seeking exposure to the crypto-asset market.”

More than half of the funds (54%) have operations in the U.S., but those funds did not respond differently from others to U.S. regulations, with 42% saying those regulations are not expected to impact them. The funds listed segregation of assets (75%), financial audits (62%) and an independent statement of reserve assets (60%) as requirements they would like to see for trading venues.

Tokenization seems not to have made a big splash in the sector. Only 15% of funds are considering investing in tokenized securities, and only 4% tokenize units in their own funds.

The portion of traditional hedge funds that invest in crypto fell from 37% in 2022 to 29% in 2023. Of the funds still investing in crypto, 62% hold less than 5% of their assets under management in crypto and only 8% hold more than 20% in crypto. Forty-six percent of those respondents said they would increase crypto investing this year, down from 67% last year. None of them said they would decrease their capital levels deployed in crypto.

Among the funds not investing in crypto, “client reaction or reputational risk” has overtaken “regulatory uncertainty” as the main reason, but 40% said that the removal of regulatory barriers would not move them to begin investing in crypto.

PwC partnered with alternative asset manager CoinShares to survey 131 crypto-native funds. The Alternative Investment Management Association obtained data from 59 traditional hedge funds for that section.

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3AC liquidators look to recoup $1.3B from founders

June 27, 2023 Coin Telegraph

3AC liquidators look to recoup .3B from founders

Bankruptcy

The report came exactly one year since a court in the British Virgin Islands ordered Three Arrows Capital into liquidation.

Teneo, the liquidators behind bankrupt hedge fund Three Arrows Capital (3AC), are reportedly seeking to recover roughly $1.3 billion in funds from founders Su Zhu and Kyle Davies.

According to a June 27 Bloomberg report, the liquidators claimed Davies and Zhu incurred the $1.3 billion in debt when 3AC was already insolvent, adding to creditors’ losses. 3AC reportedly owed creditors $3.5 billion, making the founders’ potential liability more than a third of the total debt.

A Teneo spokesperson told Cointelegraph that the goal of seeking $1.3 billion from the 3AC founders was “generally reflective” of a June 27 creditor presentation. At the time of publication, court documents did not appear to include this information.

The report came exactly one year since a court in the British Virgin Islands ordered 3AC into liquidation on June 27, 2022. In July 2022, the firm also made a Chapter 15 filing in U.S. Bankruptcy Court in the Southern District of New York.

Though Davies and Zhu have remained active on social media through the liquidation process, their physical whereabouts have been largely unknown. In June, the pair helped launch the Open Exchange, a platform for trading claims against bankrupt crypto entities.

3AC is dead, long live 3AC Ventures https://t.co/61s8uQquOZ
— Kyle Davies (@KyleLDavies) June 21, 2023

Lawyers for the liquidators in the U.S. have also attempted to make Davies and Zhu answer in court during the bankruptcy proceedings. Both 3AC founders have been issued digital subpoenas, and the legal team sought to hold Davies in contempt of court for having “repeatedly defied their obligations”.

Among the 3AC founders’ former assets included a digital art collection being auctioned off through Sotheby’s. Pieces that were a part of the collection like Dmitri Cherniak’s artwork ‘The Goose’ sold for $6.2 million in June.

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