March 20, 2014 4:07 AM

Fortress and Pantera Investment Fund Focus On 'Virtual Currencies'

Fortress Investment Group LLC and Pantera Capital have announced that they are teaming up to form an investment fund focused on virtual currencies.
According to the Wall Street Journal, the joint venture Pantera Bitcoin Partners LLC, is controlled by Pantera and allows minority equity partners Fortress, Benchmark Capital and Ribbit Capital to manage future and existing virtual currency-related investments through the fund.
New York based Fortress, who manages about $58 billion in assets, was an early bitcoin investor. A recent regulatory filing indicates the firm purchased $20 million worth of bitcoin in 2013 on which it suffered a $3.7 million paper loss at financial year end [one can only surmise that they had bought near the November top].
Pantera, who manages $147 million in assets according to their December regulatory filing, is shifting its investment focus solely to bitcoin ventures. Speaking to the WSJ, Dan Morehead, the San Francisco firm’s chief executive and founder. said:

“I have been fascinated by the promise that [bitcoin] can bring changes to the way we interact with money. So about a year ago, I decided to begin investing in bitcoin and devoting my full attention to it.”

Pantera’s hedge-fund strategies previously revolved around macro-economic indicators (such as interest rates) as well as currency exchange rate fluctuations. Now, Morehead says, the firm’s 16 investments specialists are “fully focused” on digital currencies and bitcoin.
Pantera has a stake in the controversial payments platform Ripple Labs as well as a $10 million investment Bitstamp Ltd, the Slovenia-based bitcoin exchange.
California based, Ribbit, has been a long-time investor in digital currency ventures, specifically in the arena of payment services. The firm’s founder and general partner, Micky Malka, is a board member at trade association the Bitcoin Foundation. Malka told the WSJ that “by pooling assets, the four money managers would create a larger vehicle through which some of their more conservative institutional clients may gain a small, experimental exposure to bitcoin investments.”
Benchmark, San Francisco, has focused Silicon Valley Tech startups such as Twitter Inc., Instagram, Snapchat and Yelp Inc.
The question now is whether the reference to ‘virtual currencies’ carries any significant meaning for cryptocurrencies other than Bitcoin? It would seem prudent for investment funds, such as the current venture, to develop credibility and reputation via a solid track record and at least profitable fund performance. Considering Fortress’s loss on their bitcoin investments to date, and the revelation that Pantera had managed those investment decisions does not bode well. However, to be fair, most Bitcoin investors are sitting on a net loss after the November speculative bubble topped out and returned the BTCUSD price to parity.
Whether Wall Street or Main Street, Bitcoin promises everyone a wild ride.

Venzen Khaosan @venzen

Market analyst and Open source developer with a keen interest in blockchain technology, consensus mechanisms and the decentralizing effect. He has found a solution to the PKI mechanism. Email me to discuss.