Bitfinex lists first-ever crypto hedge fund for 'accredited' investors

Quick Take

  • Bitfinex has listed $280-million worth crypto hedge fund Fulgur Alpha
  • Paolo Ardoino, CTO of Bitfinex, told The Block that the “minimum investment size of the fund is $10 million for accredited investors”
  • Notably, the fund is currently not available to U.S. residents

Cryptocurrency exchange Bitfinex has listed its first-ever cryptocurrency hedge fund.

Announcing the news on Monday, Bitfinex said the $280 million hedge fund, Fulgur Alpha, will be accessible only to institutional investors.

"The minimum investment size of the fund is $10 million for accredited investors," Paolo Ardoino, CTO of Bitfinex, told The Block.

Fulgur Alpha is a Bahamas-based absolute returns crypto hedge fund, said Bitfinex. Absolute return funds are usually designed to provide a steady return irrespective of market conditions and are most suitable for conservative investors.

The fund's assets are held in custody provider Delchain Limited, and it is managed by Deltec Fund Services, a Bahamas-based fund administrator and division of Deltec International Group.

"This framework replicates a model familiar to traditional hedge funds: A safe trading venue (Bitfinex), a crypto custody solution (Delchain), and a fund manager (Deltec Fund Services)," Ardoino told The Block.

Not available to US residents 

Bitfinex is essentially providing trading infrastructure for the fund.

"While Bitfinex currently has numerous large accounts, varying from professional traders to crypto hedge funds, this is the first time a fund of these dimensions has onboarded through an ad-hoc framework," Ardoino told The Block.

Bruno Macchialli, executive head of operations at Delchain, said the fund is a "unique proposition" and represents "a blueprint for institutional investment in crypto, leveraging the required liquidity and custody solutions."

Notably, the fund is currently not available to U.S. and Bahamas residents, as well as in other restricted jurisdictions such as Iran and North Korea, Ardoino told The Block.

Looking ahead, Bitfinex is expecting more funds to adopt Fulgur Alpha's framework. "We believe this is going to be a growing trend for 2020-2021, since it guarantees more protection for investors and it has more controls in place," Ardoino told The Block.

"We are seeing big requests in crypto-custody integrations for 2020, and this means that such custody providers are going to service a growing number of funds (either fully crypto-oriented or just dedicating a part of their assets under management to crypto) that want to trade on a professional trading venue but at the same time want to ensure that they have all the protection they are used to in a traditional fund set up," Ardoino concluded.

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