Founders Fund, the venture capital firm co-founded by billionaire Peter Thiel, closed nearly all of its eight-year bet on crypto shortly before the market began to crash last year, generating around $1.8 billion in profit.
The San Francisco-based fund made its first investment in bitcoin in early 2014 and then invested heavily in cryptocurrencies. About two-thirds of his total investment was used to buy bitcoin, people close to the fund said.
Founders Fund sold the vast majority of its cryptocurrency portfolio at the end of March 2022, before the digital asset market was swept up in a crisis in May last year, one of the people close to the fund said.
The fund currently does not have significant exposure to cryptocurrencies, the people said. The settlement of his crypto bet has not been previously reported. Founders Fund declined to comment.
ThielA big supporter of Republican candidates and a supporter of former US President Donald Trump, he was one of the first major investors to buy large sums of bitcoin and has subsequently been highly bullish on the digital currency.
In April 2022, around the same time the Founders Fund sold most of its cryptocurrency holdings, Thiel said he was bullish on bitcoin's future. He told a cryptocurrency conference in Miami that "we are at the end of the fiat money regime" and suggested that its price, which was trading at around $44,000 at the time, could increase by a factor of 100.
Thiel said JPMorgan CEO Jamie Dimon and BlackRock boss Larry Fink "need to allocate some of their money to bitcoin," adding: "We need to push them."
The price of bitcoin, which launched in 2009, has risen sharply from about $750 in 2014 to an all-time high of over $65,000 in November 2021. However, its price has been volatile in recent years, with several major crashes. in value, including a drop to around $15,500 in November of last year, a two-year low.
The digital asset market has been rocked by a crisis since May of last year, forcing high-profile crypto firms like Terraform Labs, Celsius, Voyager, and Three Arrows Capital into bankruptcy.
Market sentiment towards cryptocurrencies was further damaged in November when FTX, the second largest cryptocurrency exchange, closed due to creditors for more than $3 billion, and its co-founder. Sam Bankman-fried he was charged with multiple counts of fraud.
By December, bitcoin had lost around three-quarters of its value since its peak and more than $2 trillion of value had been wiped out of the global crypto market.
Several blue-chip investors from Silicon Valley have piled on digital currencies in recent years, though most have focused their investments on equity stakes in crypto businesses rather than buying cryptocurrency outright.
Some exceptions to this include A16z crypto, the crypto arm of venture firm Andreessen Horowitz, which raised a $4.5 billion fund last year and also invests directly in cryptocurrencies and tokens.
Similarly, Paradigm, a cryptocurrency venture firm founded in 2018 by Coinbase co-founder Fred Ehrsam and former Sequoia Capital partner Matt Huang, raised a $2.5 billion fund in late 2021.
But many large financial institutions have stayed away from cryptocurrencies for fear of cybersecurity and its links to money laundering and drug trafficking. In 2017, JPMorgan's Dimon called bitcoin a "fraud."
The Founders Fund's shift into cryptocurrency, which had been one of its core positions, was one of nine big exits the venture fund made between 2020 and the end of last year that saw it return roughly $13 billion to investors. .
Other exits also included the initial public offerings of companies he had backed since his early fundraisers, such as Airbnb and Palantir, the data analytics group Thiel co-founded.
Thiel co-founded PayPal in 1998 and became one of Silicon Valley's most successful investors, as well as the first venture capitalist to back Facebook.
Founders Fund has more than $11 billion under management, including $5 billion of capital raised in two funds last year, and has acquired stakes in more than 100 companies including Elon Musk's SpaceX, ride-hailing app Lyft and Anduril defense technology group.
The fund is in talks to acquire an equity stake in open AIthe developer behind the ChatGPT chatbot, with a valuation of $29 billion.
