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Former portfolio manager at the University of Chicago endowment and current CIO of Blocktower Capital, Ari Paul, was reported to have made the largest-ever speculative play using BTC options during December of 2017. The contracts, which will expire on Dec. 28, 2018, are almost guaranteed to close as a total loss.
Ari Paul’s Record Options Position Set to Soon Flop
The options were purchased for nearly $ 1 million when BTC was trading for approximately $ 16,200, 12 months ago.
The call options have a strike price of $ 50,000, meaning that BTC would have to spike by over 1,400 percent in the next two and a half weeks in order for the contracts to retain any value, as they will expire to be worthless should prices fail to sit above $ 50,000 as of Dec. 28.
The $ 50,000 calls were purchased for $ 3,600 each. Twitter-based cryptocurrency commentator Bambouclub recently posted that contracts for $ 40,000 calls are currently trading for $ 9.60 on Deribit, estimating that Paul has already eaten a more than 99.73 percent loss.
Should the tides turn in Paul’s favor, the contracts would entitle him to 275 BTC value at $ 50,000 each, equating to $ 13.8 million worth of crypto.
Apparently-Doomed Options Position the Largest Taken on Ledgerx
During December of 2017, Ledgerx chief executive officer, Paul Chou, confirmed the position, adding that such was the largest options trade to have been placed using the company’s platform.
While protecting the identity of the trader who placed the position, Chou described the trade as being indicative of increased institutional demand for cryptocurrency, stating: “Without a doubt, there are institutions out there that are looking at these types of trades or have done these types of trades,” adding that the trader behind the position was “not an individual.”
On Dec. 22, 2017, Business Insider reported that “people familiar with the matter” had revealed that the seven-figure position had been made by Blocktower Capital. The report also cited a tweet posted by Blocktower co-founder Ari Paul, stating “I wonder who bought these?” that was accompanied by a winking smiley and a link to Wall Street Journal’s coverage of the trade.
Options Position Taken to Manage Risk
In an interview with CNBC that was published on Dec. 26, 2017, Paul confirmed that he had made the trade, stating: “I think it’s not quite as interesting as people make it out to be.”
Paul stated that the position had been taken in the interest of managing the risk of his fund’s portfolio, adding that he “wouldn’t recommend for most people to buy these options.”
“I manage a cryptocurrency portfolio and I’m trying to give investors access to the upside, but I’m also very focused on risk management,” Paul continued. “So these calls are a way for me to capture upside exposure, while actually owning less bitcoin [and] reducing my downside risk.”
What is your response to the apparently impending wipe-out of Blocktower’s record sized options position? Share your thoughts in the comments section below.
Images courtesy of Shutterstock
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U.K.-based startup Trustology, which develops storage solutions for digital assets, has raised $ 8 million in funding and we’ve got the news in this edition of The Daily. We also look at the SEC’s decision to fine another crypto company for breaching U.S. securities laws and HTC’s decision to have Brave as the default web browser on its Exodus 1 smartphone.
Crypto Security Startup Raises $ 8 million
London-headquartered crypto startup Trustology has received $ 8 million in seed funding in a round led by Two Sigma Ventures, Reuters reported. The company develops a technology that helps investors enhance the security of their digital assets. According to CEO Alex Batlin, Trustology plans to use the capital to expand globally and provide support for more cryptocurrencies.
The product offered by the British company is designed to secure crypto assets. It provides investors with a simple solution to safeguard the private keys that give them access to their cryptocurrencies – hardware security modules. These are specialized processors that store passwords and digital keys.
Alex Batlin noted that Trustology’s product had been initially designed for banks but the startup is currently focusing more on crypto hedge funds and individual investors. He commented:
The original thinking was we would build the tech and sell to the banks. They are not moving as quickly as we are and we have quite a lot of demand from individuals, as well as crypto funds.
According to Matt Jacobus, a venture partner at Two Sigma, similar solutions are needed to develop a larger trading ecosystem around digital assets for institutional investors. Blockchain technology developer Consensys also participated in the funding round.
SEC Fines Cryptocurrency Fund Coinalpha
The U.S. Securities and Exchange Commission (SEC) has gone after another crypto company that, according to the regulator, sells securities without registration. The SEC, which has determined that Coinalpha does not qualify for an exemption, has fined the cryptocurrency fund manager and issued a cease and desist order on Dec. 7, 2018.
The California-based Coinalpha Advisors, registered as a Delaware limited liability company, had been operating two digital asset funds – Coinalpha Falcon and Coinalpha Index, Finance Magnates reported. According to an announcement by the commission, the owners of the company have agreed to pay a civil money penalty of $ 50,000.
Coinalpha also agreed to halt its offerings and pay back the fees it had collected from customers. The digital asset fund has already raised more than $ 600,000 from 22 investors in five states. The company has also promised to conduct a review of its online platform and marketing materials.
Although the regulatory status of cryptocurrencies in the United States is still unclear, the SEC has already fined and issued cease and desist orders to a number of crypto businesses after concluding that securities laws apply to the tokens they were issuing.
Brave Is the Default Browser on HTC Exodus 1
Privacy-oriented web browser Brave, which supports opt-in ads and cryptocurrency payments between users, has been announced as the default browser on the new HTC Exodus 1 phone, according to posts on crypto forums and social media. The application supports a crypto tipping system which relies on Brave’s basic attention token (BAT) and enjoys growing popularity in the crypto community.
HTC has made its new smartphone available for buyers willing to pay in cryptocurrency. The device, which has been advertised as a blockchain-powered phone, can be purchased with three major digital coins. It has been offered at fixed prices in bitcoin core, ethereum and litecoin – 0.15 BTC, 4.78 ETH, and 19.84 LTC (around $ 500 at the time of writing). However, a message on HTC’s website reads “This product is currently out of stock.”
The news comes days after the launch of another blockchain smartphone called Finney, which has been developed by Sirin Labs. The device has an integrated cold storage cryptocurrency wallet and can be purchased on the company’s website for $ 999.
What are your thoughts on today’s news tidbits? Tell us in the comments section.
Images courtesy of Shutterstock, Trustology, HTC.
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Marriott, the world’s largest hotel company, said it identified a data breach in its Starwood reservation system that may have exposed the personal information of up to 500 million guests.
WSJ.com: US Business
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A big pile of debt comes due at Tesla on March 1 – $ 920 million worth. But starting in two weeks, the company has a chance to make it disappear.
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Singapore-based cryptocurrency exchange Kucoin has announced it has raised a combined total of $ 20 million in series A funding. Taking part in the Kucoin founding round were IDG Capital, Matrix Partners and Neo Global Capital.
$ 20 Million for Kucoin Exchange
Opened for cryptocurrency trading in September 2017, Kucoin reports it now has more than five million registered users, coming from over 100 countries. It is the 52nd most popular venue in the world by trading volume, with close to $ 600 million of cryptocurrency traded a month. Full details of the Series A deal have not been released yet, so it is impossible to calculate what valuation it was based on.
“This is truly a dynamic and significant partnership,” commented the exchange’s CEO Michael Gan. “The combined forces of IDG Capital, Matrix Partners, and Neo Global Capital will help Kucoin grow substantially, expand understanding and adoption of cryptocurrency for millions of potential users, and help these users more efficiently find the best products available in the crypto-world no matter where on the planet they may exist.”
Expanding Across the World
The capital is earmarked for helping the exchange with a number of developments. Firstly, Kucoin Platform 2.0 is expected to go live in Q1 2019 and allow the exchange to scale and add new features such as stop orders, upgraded APIs and a dust collector. The company will also hire more customer support staff to offer ‘concierge-level’ service to traders. And a large portion of the newly secured funds will help expand the Kucoin research team.
Kucoin, which entered Australia two months ago, will also leverage the new capital for a global expansion with targeted marketing and advertising campaigns. The company said that in the coming months it will expand in different markets, with Vietnam, Turkey, Italy, Russia and all Spanish-speaking countries as the main focus for growth in Q4 of 2018. It estimates that a total of 10 global markets will be up and running by Q2, 2019.
Where should Kucoin expand to next? Share your thoughts in the comments section below.
Images courtesy of Shutterstock.
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