The Founders Fund, a venture capital firm co-founded by billionaire Peter Thiel, closed nearly all of its eight-year bet on cryptocurrencies last year just before the market began to crash, returning about $1.8 billion. produced.
The San Francisco-based fund made its first investment in Bitcoin in early 2014 and has since followed up with significant investments in cryptocurrencies. About two-thirds of the total investment went into bitcoin purchases, according to a person close to the fund.
The Founders Fund has sold most of its entire cryptocurrency portfolio by the end of March 2022 before the digital asset market was wiped out by the crisis last May, said one of the sources close to the fund. increase.
The fund does not currently have material exposure to cryptocurrencies, the people said. No reduction in its crypto bets has ever been reported. Founders Fund declined to comment.
A staunch supporter of the Republican candidate and a supporter of former U.S. President Donald Trump, Thiel was one of the earliest mainstream investors to buy Bitcoin in bulk, and has since invested heavily in it against digital currencies. It was loud and strong.
In April 2022, around the same time that the Founders Fund sold most of its crypto holdings, Thiel said he was optimistic about Bitcoin’s future. “We are nearing the end of the fiat currency regime,” he said at a cryptocurrency conference in Miami, where the price (which was trading at around $44,000 at the time) is expected to rise 100-fold. suggested that it is possible.
Thiel said JP Morgan chief executive Jamie Dimon and BlackRock boss Larry Fink “need to allocate some of their money to Bitcoin,” adding, “They should be opposed,” he added.
First issued in 2009, the price of Bitcoin has skyrocketed dramatically from around $750 in 2014 to an all-time high of over $65,000 by November 2021. , the lowest in two years, including a drop to about $15,500 last November.
The digital asset market has been rocked by the crisis since May of last year, forcing prominent cryptocurrency companies such as Terraform Labs, Celsius, Voyager and Three Arrows Capital to go bankrupt.
When the second-largest crypto exchange, FTX, closed in November for more than $3 billion in creditors and its co-founder Sam Bankman-Fried was indicted on multiple fraud charges, the virtual Market sentiment towards the currency has further eroded.
By December, Bitcoin had lost about three-quarters of its value from its peak, wiping more than $2 trillion from the value of the global crypto market.
In recent years, some of Silicon Valley’s brightest investors have invested in digital currencies, but most of them have focused on investing in cryptocurrency businesses rather than buying cryptocurrencies directly.
A few exceptions to this include A16z crypto, the crypto arm of venture firm Andreessen Horowitz, which raised $4.5 billion last year and invests directly in crypto coins and tokens.
Similarly, Paradigm, a crypto venture founded in 2018 by Coinbase co-founder Fred Ehrsam and former Sequoia Capital partner Matt Huang, has raised $2.5 billion in funding in the second half of 2021.
However, many large financial institutions have stayed away from cryptocurrencies due to concerns over cybersecurity and links to money laundering and drug trafficking. called.
One of the Founders Fund’s core positions, moving into cryptocurrencies, is one of about nine big exits the venture fund has made from 2020 to the end of last year, offering investors about $13 billion. I was able to return it.
Other exits included initial public offerings of companies he’d backed since his early funding, including Airbnb and Palantir, a data analytics group co-founded by Thiel.
Thiel co-founded PayPal in 1998 and became one of Silicon Valley’s most successful investors, including being the first venture capitalist to back Facebook.
The Founders Fund manages more than $11 billion, including $5 billion in capital raised in two funds last year, and supports more than 100 companies, including Elon Musk’s SpaceX, ride-hailing app Lyft, and defense technology group Anduril. are investing in
Most recently, the fund is in talks to acquire a stake in OpenAI, the developer behind the chatbot ChatGPT, at a valuation of $29 billion.