When Paul Tudor Jones bet 1% to 2% of his assets on bitcoin in May 2020 it was unclear where the billionaire had bought his crypto, or how. The industry remained uncertain if his investment was direct. After all, his hedge fund had started flirting with bitcoin futures only days before.
But in the year since, his firm, the $44.5 billion Tudor Investment Corporation, has indeed established rails for direct crypto ownership. It secured custodial ties with institutional powerhouses Coinbase and Bakkt, according to new filings with the U.S. Securities and Exchange Commission (SEC).
Coinbase Custody Trust Company, Bakkt Trust Company and Tagomi Trading LLC (the institutional brokerage subsidiary Coinbase bought in May 2020) all provide custodial services to Tudor Jones’ family-only hedge fund, the documents state.
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The filings provide a rare glimpse into the hush-hush world of institutional crypto dealmaking, where well-heeled clients pile into an emerging asset class bankers once deemed absurd. Many, like Tudor Jones, see bitcoin as an inflation hedge, and their ranks are swelling in the pandemic economy.
They’re also playing a key role in the 2020-2021 bull market. On-chain data shows $20 million+ whales bought over 500,000 bitcoins in the final months of 2020, according to Chainalysis.
Against this backdrop are service providers like Coinbase who occasionally tout their institutional clients as they race to capture yet more hedge funders’ dollars. But Coinbase, which did not comment for this article, never revealed its links to Paul Tudor Jones.
Representatives for Tudor Group and Bakkt did not respond to CoinDesk’s requests for comment.
A family affair
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For now, Tudor Jones appears to be restricting direct crypto exposure to a small corner of his clients. “Tudor Family Fund II,” which is open to relatives and close associates of the macro king, was the only one of Tudor Investment Corp.’s eight hedge funds to disclose crypto custodians on the firm’s annual Form ADV, filed March 31.
Not even the $27 billion Tudor BVI Global Fund, which last year presaged Tudor Jones’ bitcoin romance when it jumped into crypto futures in early May, has any industry tie-ups, according to similar SEC filings.
The Tudor Jones family fund was worth $1 billion at last check but the chances of all that being bitcoin are slim to none. The exclusive fund maintains a vast network of partners in the custodian and prime brokerage space – names like Deutsche Bank, Citigroup, Credit Suisse – that suggest broad exposure to the global markets.
But a wider swath of Tudor clients nonetheless appears poised for direct crypto exposure, according to the asset manager’s latest regulatory risk brochure. It included an entire section on the risks of investing in crypto for the first time in its four-decade history.
“Certain Clients are permitted to enter into cryptocurrency transactions as described in the relevant Offering Materials,” the document states, through “direct investment on a spot basis or indirect investment” in crypto derivatives. Notably, the firm is not holding itself to crypto futures contracts.
The document does not specify what it means by “certain clients.” However, in a section describing what investment strategies are only available to “proprietary accounts” like the family fund, it does not list cryptocurrency transactions.
Institutional service providers
Tudor Investment Corp. is not the first big-name asset manager to loudly tout its crypto bets while keeping its custody links more quiet.
Britain’s Ruffer Investment pulled a similar strategy when it bought $745 million in bitcoin last November without revealing who was holding the coins. (CoinDesk later revealed Coinbase as the custodian.)
The soon-to-be-publicly-traded Coinbase has expanded well beyond its roots as a retail exchange. The firm has served headline-grabbing clients like Ruffer, Tesla and MicroStrategy.
The acquisition of Tagomi, the keystone of Coinbase’s institutional offering, was announced in May 2020. The deal closed in August 2020.