Meet the hottest hedge fund in Asia

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wet Tuesday evening in March, about 200 people crammed into a bar in the Four Seasons Hotel in San Francisco to discuss the most interesting topic in finance and technology: the cryptocurrency: the party was organized only two days before, yet they paid, mostly Asian men between 20 and 30 years, bringing iPhone X and great ideas on how digital currencies could redesign the future and make it rich.the chance to rub elbows with the latest nighttime story in cryptography, FBG Capital of Beijing.

For the gathered crowd, FBG's fame comes from turning $ 20 million into $ 200 million into a year, in fact, ten months before this evening, the group of dealers behind the company did not yet have a name for their company, today counts the venture capital company of Silicon Valley Sequoia Capital among its blue investors -chip and is a or the largest cryptocurrency managers in Asia. in America and it s

The FBG approach has three pillars: invest as a venture capitalist in initial coin offerings (ICO), exchange news and events by moving in and out of the tokens quickly and, critically, exploiting internal relations and marketing hype to ensure profitability. The rise of society speaks of the world of cryptocurrencies, in which the declared ideals of democratization are a joke and being an insider is the surest route to riches.

founder of FBG Shuoji Zhou, 36, grew up in Yancheng, China, a regional city of 7 million in Jiangsu Province, a few hours north of Shanghai. He studied applied mathematics at the University of Electronic Sciences & amp; Technology, a mid-level school in central China, but it was not there for the courses. "Friendship, I think, is the most important thing in college, I forgot all the things I've studied," he says Forbes from a hotel room in San Francisco. FBG, which stands for Fintech Blockchain Group, has employees in New York, Singapore, South Korea and China. Until recently, its headquarters was a shared co-working space in Beijing. His website is a single page with his logo and an email address.

After college, Zhou worked in Beijing as an IT consultant for IBM and then Oracle, and in 2014 committed $ 10,000 of his savings to trade bitcoins. year, he left Oracle to trade full-time encrypted and increased his stock up to nearly $ 100,000 during a period when the digital currency rose from $ 270 to $ 430. One of Zhou's tricks was to exploit the inherent inefficiencies of the nascent market. He could often buy bitcoins on an exchange for $ 300 and sell it on another to, say, $ 301.50, pocketing a $ 1.50 with no currency risk. For anyone with a fast internet connection and a minimum of trading skills, it was easy money.

He soon joined a group of Chinese traders who shared their money, and by early 2017 they had accumulated about $ 20 million. That year, when the ICO frenzy began to boil, Zhou and his workmates were greedy buyers, sometimes investing just over a research document and high-sounding promises. His group has invested millions in dozens of projects such as Tron, Decentraland and MakerDAO.

A former member of Zhou's commercial operation, Gordon Chen, describes the unconventional approach of ICO's investment by FBG: Looks closely at the founding team, controls the chat rooms on Telegram and talk to academics, scientists, engineers, investors and community leaders. Chen adds that his ICO due diligence required him to travel incessantly to meet the crypto project teams. "I only slept three or four hours a night this week," Chen said in San Francisco in March.

The amorphous investment process of FBG, in which rigid numbers are almost non-existent, is typical in cryptoland and has so far returned wealth. His investment in OmiseGO, a cryptographic platform that claims to provide financial services to unallocated populations, jumped 33 times after FBG bought coins worth $ 0.27 a pop in mid-2017. He bought tokens in Zilliqa, a platform to accelerate financial transactions, at around nine-tenths of a cent per coin. This year, Zilliqa traded up to 20 cents and now sells for 6, a yield of 567%. Like other big investors in cryptography, FBG offers "pre-sale" discounts on ICOs up to 30%.

"I consider the FBG to be one of the most talented investor teams in this space," says Olaf Carlson-Wee, 29, a cryptic boy who adorned the cover of Forbes of 27 July 2017 and is the founder of the largest cryptographic fund in the United States, Polychain Capital, which has about $ 1 billion in assets under management. FBG is known for having identified promising encryption projects in Asia.

According to Zhou, trade accounts for more than half of FBG's revenue, but since the encryption environment has become more transparent and efficient, the company has moved from arbitrary cryptographic exchange price to discrepancies with event-driven trading, in which FBG focuses on topics such as regulatory news will affect the encrypted prices. For example, when the CME group announced that it would launch bitcoin futures contracts last December, Zhou has long gone on bitcoin hikes. When the news arrived that the Coincheck Japanese exchange had been breached at the start of this year, it quickly went short. In 2017, FBG claims to quadruple its money in trading, even if the company does not claim to divulge any details.

Not all FBG tactics seem completely above. A little publicized investment dynamics that FBG executives ignore is its relationship to the cryptocurrency trade the cryptographic equivalent of the NYSE or Nasdaq. Typically, when a new token announces its listing on a higher exchange, the price skips because the new liquidity is perceived as approval. Zhou maintains friendly relations with the three most active cryptographic exchanges: OKEx, Binance and Huobi, each of which processes $ 500 million to $ 1 billion or more in cryptocurrencies per day. Using these connections, FBG has helped the ICOs who have invested, like Zilliqa, to get listings on the bags.

Many cryptographic hedge funds try to influence exchange lists, but FBG has a compelling advantage: the volume of trade. Since FBG is an active marketmaker – says it earns $ 10 billion in exchanges a month – it can direct orders to a given trading platform, bringing more revenue into an exchange.

Zhou says he has no "special rights" "To influence which currencies are quoted in any exchange, he can only make recommendations, and the exchanges make their own decisions." Even if this is the case, a problem with these agreements is that They are all communicated, for example, Huobi, based in Singapore, has a committee of external partners that makes recommendations for the token listing, which are published on its website, FBG is in committee, but Binance makes no statements of this kind.

The hypoping of its investments is another strategic priority in the business model of FBG In China, FBG puts the ICOs in touch with news agencies that pay bloggers to write reviews of their tokens, apparently a common practice in Asia, last year FBG invested in Tron, a cryptographic platform that claims to have created "a free global entertainment system, using block technology chain ". Tron was born in China and has been widely criticized for allegedly having copied some of his research documents directly from another cryptographic project, Filecoin.

Why did FBG buy Tron? "We thought we were a great marketer," says Richard Liu, Tron's CEO FBG partner, Justin Sun. The 450,000 follower Sun Twitter feed is full of promotional messages, like a recent tweet with the Tron logo on the Nasdaq Jumbotron of Times Square with the caption "#TRON hits again #NASDAQ! Let's change blockchain, the internet and the world! We're going full speed." Do not leave yourself behind. "Sun exaggerated Tron with a market value of $ 18.9 billion, despite not having significant profits. (FBG claims to have returned its investment Tron.)

FBG also has a reputation for quickly entering and leaving investments. "They are fins," says Yubo Ruan, founder of 8 Decimal Capital based on Palo Alto, a rival hedge fund crypto. "Their reputation is the pump and dump."

Liu, a former investment banker who joined FBG in June 2017, vehemently denies the accusation. The company does not disclose its ICO trading history and is reluctant to disclose specific holdings. An exception: Aeternity, which competes with Ethereum, the second largest cryptographic platform. Founded by Yanislav Malahov, the self-anointed godfather of Ethereum, Aeternity offers so-called "offchain".

So far in 2018, bitcoin has fallen by over 50%. Liu argues that FBG trading has been profitable every month, although it claims that ICO investments have declined by about 30% in the current bear market.

Like most cryptocurrency investors, FBG is concerned with regulation. Zhou's biggest concern is that the SEC could say "All these tokens are illegal". The dark clouds are damned, the FBG is pushing forward, urging investors for its new Token Fund, registered in the Cayman Islands. It has already raised $ 100 million, with commissions of "1.5 and 20." In addition to Sequoia and Polychain, Beijing Bitmain, the largest bitcoin mining operation in the world, has engaged in the new FBG fund.

"We want to be an institution rather than just people who make money," says Liu from a restaurant in San Francisco. Who knows? In a market where the anti-establishment is rewarded, the fuzzy approach to FBG's money management could be corrected

Reaching Jeff Kauflin at [email protected]. Follow him on Twitter at the @ JeffKauflin address. & Nbsp; Cover image by Stefen Chow for Forbes.

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a wet Tuesday evening in March, about 200 people crammed into a bar in the Four Seasons Hotel in San Francisco to discuss the most interesting topic in finance and technology: cryptocurrencies. days before, yet they shed mostly Asian men between 20 and 30 years, bringing iPhone X and great ideas on how digital currencies could reshape the future and make them rich.They were attracted by the chance to rub elbows with 39, last night's success story in cryptography, FBG Capital of Beijing.

For the crowd gathered, FBG's fame comes from turning $ 20 million into $ 200 million in a year, in fact, ten months before this evening, the group of traders behind the company did not They still have a name for their company, today counts the venture capital company Silicon Valley Sequoia Capital among its blue-chip investors and is one of the largest criptag managers in Asia, they have landed in America and are looking for investors [19659003] FBG The rise of the company speaks of the world of cryptocurrencies, in which the declared ideals of democratization are a joke and being an insider is the safest way towards the riches.

founder of FBG Shuoji Zhou, 36, grew up in Yancheng, China, a regional city of 7 million in Jiangsu Province, a few hours north of Shanghai. He studied applied mathematics at the University of Electronic Science & Technology, a mid-level school in central China, but was not there for courses. "Friendship, I think, is the most important thing in college, I forgot all the things I've studied," he says Forbes from a hotel room in San Francisco. FBG, which stands for Fintech Blockchain Group, has employees in New York, Singapore, South Korea and China. Until recently, its headquarters was a shared co-working space in Beijing. His website is a single page with his logo and an email address.

After college, Zhou worked in Beijing as an IT consultant for IBM and then Oracle, and in 2014 committed $ 10,000 of his savings to trade bitcoins. year, he left Oracle to trade full-time encrypted and increased his stock up to nearly $ 100,000 during a period when the digital currency rose from $ 270 to $ 430. One of Zhou's tricks was to exploit the inherent inefficiencies of the nascent market. He could often buy bitcoins on an exchange for $ 300 and sell it on another to, say, $ 301.50, pocketing a $ 1.50 with no currency risk. For anyone with a fast internet connection and a minimum of trading skills, it was easy money.

He soon joined a group of Chinese traders who shared their money, and by early 2017 they had accumulated about $ 20 million. That year, when the ICO frenzy began to boil, Zhou and his workmates were greedy buyers, sometimes investing just over a research document and high-sounding promises. His group has invested millions in dozens of projects such as Tron, Decentraland and MakerDAO.

A former member of Zhou's commercial operation, Gordon Chen, describes the unconventional approach of ICO's investment by FBG: Looks closely at the founding team, controls the chat rooms on Telegram and talk to academics, scientists, engineers, investors and community leaders. Chen adds that his ICO due diligence required him to travel incessantly to meet the crypto project teams. "I only slept three or four hours a night this week," Chen said in San Francisco in March.

The amorphous investment process of FBG, in which rigid numbers are almost non-existent, is typical in cryptoland and has so far returned wealth. His investment in OmiseGO, a cryptographic platform that claims to provide financial services to unallocated populations, jumped 33 times after FBG bought coins worth $ 0.27 a pop in mid-2017. He bought tokens in Zilliqa, a platform to accelerate financial transactions, at around nine-tenths of a cent per coin. This year, Zilliqa traded up to 20 cents and now sells for 6, a yield of 567%. Like other big investors in cryptography, FBG offers "pre-sale" discounts on ICOs up to 30%.

"I consider FBG to be one of the most talented investor teams in this space," says Olaf Carlson-Wee, 29, a cryptic boy who adorned the cover of Forbes of 27 July 2017 and is the founder of the largest cryptographic fund in the United States, Polychain Capital, which has about $ 1 billion in assets under management. FBG is known for having identified promising encryption projects in Asia.

According to Zhou, trade accounts for more than half of FBG's revenue, but since the encryption environment has become more transparent and efficient, the company has moved from arbitrary cryptographic exchange price to discrepancies with event-driven trading, in which FBG focuses on topics such as regulatory news will affect the encrypted prices. For example, when the CME group announced that it would launch bitcoin futures contracts last December, Zhou has long gone on bitcoin hikes. When the news arrived that the Coincheck Japanese exchange had been breached at the start of this year, it quickly went short. In 2017, FBG claims to quadruple its money in trading, even if the company does not claim to divulge any details.

Not all FBG tactics seem completely above. A little publicized investment dynamics that FBG executives ignore is its relationship to the cryptocurrency trade, the cryptographic equivalent of the NYSE or Nasdaq. Typically, when a new token announces its listing on a higher exchange, the price skips because the new liquidity is perceived as approval. Zhou maintains friendly relations with the three most active cryptographic exchanges: OKEx, Binance and Huobi, each of which processes $ 500 million to $ 1 billion or more in cryptocurrencies per day. Using these connections, FBG has helped the ICOs who have invested, like Zilliqa, to get listings on the bags.

Many cryptographic hedge funds try to influence exchange lists, but FBG has a compelling advantage: the volume of trade. Since FBG is an active marketmaker – says it earns $ 10 billion in exchanges a month – it can direct orders to a given trading platform, bringing more revenue into an exchange.

Zhou says he has no "special rights" "To influence which currencies are quoted in any exchange, he can only make recommendations, and the exchanges make their own decisions." Even if this is the case, a problem with these agreements is that They are all communicated, for example, Huobi, based in Singapore, has a committee of external partners that makes recommendations for the token listing, which are published on its website, FBG is in committee, but Binance makes no statements of this kind.

The hypoping of its investments is another strategic priority in the business model of FBG In China, FBG puts the ICOs in touch with news agencies that pay bloggers to write reviews of their tokens, apparently a common practice in Asia, last year FBG invested in Tron, a cryptographic platform that claims to have created "a free global entertainment system, using block technology chain ". Tron was born in China and has been widely criticized for allegedly having copied some of his research documents directly from another cryptographic project, Filecoin.

Why did FBG buy Tron? "We thought we were a great marketer," says Richard Liu, Tron's CEO FBG partner, Justin Sun. The 450,000 follower Sun Twitter feed is full of promotional messages, like a recent tweet with the Tron logo on the Nasdaq Jumbotron of Times Square with the caption "#TRON hits again #NASDAQ! Let's change blockchain, the internet and the world! We're going full speed." Do not leave yourself behind. "Sun exaggerated Tron with a market value of $ 18.9 billion, despite not having significant profits. (FBG claims to have returned its investment Tron.)

FBG also has a reputation for quickly entering and leaving investments. "They are fins," says Yubo Ruan, founder of 8 Decimal Capital based on Palo Alto, a rival hedge fund crypto. "Their reputation is the pump and dump."

Liu, a former investment banker who joined FBG in June 2017, vehemently denies the accusation. The company does not disclose its ICO trading history and is reluctant to disclose specific holdings. An exception: Aeternity, which competes with Ethereum, the second largest cryptographic platform. Founded by Yanislav Malahov, the self-anointed godfather of Ethereum, Aeternity offers so-called "offchain".

So far in 2018, bitcoin has fallen by over 50%. Liu argues that FBG trading has been profitable every month, although it claims that ICO investments have declined by about 30% in the current bear market.

Like most cryptocurrency investors, FBG is concerned with regulation. Zhou's biggest concern is that the SEC could say "All these tokens are illegal". The dark clouds are damned, the FBG is pushing forward, urging investors for its new Token Fund, registered in the Cayman Islands. It has already raised $ 100 million, with commissions of "1.5 and 20." In addition to Sequoia and Polychain, Beijing Bitmain, the largest bitcoin mining operation in the world, has engaged in the new FBG fund.

"We want to be an institution rather than just people who make money," says Liu from a restaurant in San Francisco. Who knows? In a market where the anti-establishment is rewarded, the fuzzy approach to FBG's money management could be corrected

Reaching Jeff Kauflin at [email protected]. Follow him on Twitter on @JeffKauflin. Cover image by Stefen Chow for Forbes.