Fortress Investment Group LLC (NYSE:FIG) disclosed that it had purchased $20 million worth of Bitcoins in a recent Securities and Exchange Commission filing (h/t Saumya Vaishampayan at MarketWatch), but its investment has already lost value, dropping to $16.3 million as of December 31, 2013, which means that it’s approaching $10 million now if Fortress has held onto its position (unless they left their Bitcoins deposited with Mt. Gox, of course).
Fortress mentioned Bitcoin investment last year
Fortress Investment Group LLC (NYSE:FIG) director Michael Novogratz hadn’t kept his Bitcoin investment a secret, but when he first mentioned his interest in Bitcoins they were trading at about $200. If Fortress had invested $20 million at that point and sat on it they would still be up right now, so the firm must have either increased the size of its position at a higher price or tried to buy and sell the digital currency and gotten caught by its now infamous volatility.
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Fortress Investment Group LLC (NYSE:FIG) also announced the formation of the Bitcoin Investment Trust at the end of last year, reports Dan Primack for Fortune, which would attempt to act like a digital currency ETF and offer investors exposure to Bitcoin prices without actually buying and selling themselves. By putting themselves between retail investors and the unregulated Bitcoin markets, Fortress would take on a great deal of dealer risk but presumably would benefit from growing public interest. There has also been some talk about Fortress funding Bitcoin-related start-ups, though any plans related to Bitcoin are probably getting a hard second look right now.
Mt. Gox has finally filed for bankruptcy
A lot has happened in the Bitcoin world since the end of 2013, so Fortress Investment Group LLC (NYSE:FIG) might not be happy about its foray into digital currencies right now, but it does show how close Bitcoin came to being taken seriously by big financial institutions. If the collapse of Mt Gox (which is finally playing itself out now that the platform has filed for bankruptcy, according to Reuters) doesn’t spoil people’s enthusiasm for the cryptocurrency.
About 7% of the world’s Bitcoins disappeared when Mt. Gox went under, $480 million at current exchange rates, so a lot of people got burned. Many of the dynamics that made Bitcoin appealing in the first place (anonymous, deregulated, irreversible) are still in place, but they may not be seen through the same optimistic lens that they had been in the past.