Point72 Ventures, the venture capital firm of billionaire Steve Cohen, whose unconventional style helped inspire the hit television show Billions, is now in the bitcoin game, having led a $21 million Series A investment in cryptocurrency analytics firm Messari.
Equally notable is that several of the largest cryptocurrency exchanges in the world are now also backing the firm, including London-based Blockchain.com’s Blockchain Ventures, New York-based Gemini’s Gemini Frontier Fund, Wyoming-based Kraken’s Kraken Ventures and Antigua-based FTX’s sister company, Alameda Capital. The venture capital arm of Coinbase and several other investors also returned to this round after participating in the seed funding.
As the SEC and other regulators increasingly look to crack down on the companies that raised capital using initial coin offerings (ICOs), or otherwise use or trade those tokens, the investment marks a turning point in transparency for the often opaque industry, not by forcing innovators in the space to comply with regulations, but by providing them a clear path to voluntarily disclose data core to investors’ decisions. Messari founder and CEO Ryan Selkis describes the firm as part Big Four auditor and part JPMorgan analyst, with a dash of the U.S. Securities and Exchange Commission’s Edgar repository of information and “financial filing equivalents.”
“The defaults that many entrepreneurs, and builders in the industry have is to be transparent and cooperative,” says Selkis, 37. “And try to be as helpful and communicative as possible with their communities. The problem is, if you’re a core developer or someone that was early in a project, and you’re sharing certain sensitive information that even looks like it might be financial in nature, and then the SEC comes knocking on your door, it can create a tremendous amount of headaches.”
To help mitigate those concerns, Messari launched in late 2017, and has assembled a team of 35 people helping bring transparency to the crypto industry that frequently finds itself at loggerheads with regulators. Instead of forcing financial disclosures, in 2018 the firm bought New York-based blockchain analysis firm, OnChainFX for an undisclosed amount, and now works directly with the companies that create tokens to understand how the assets were distributed; Kaiko for markets data; Coinmetics for blockchain data sets; Flipside Crypto, Staking Rewards and several other providers for more niche assets; and ingests raw blockchain data by running its own nodes.
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The data is then repackaged as Messari Pro, which lets individuals track and chart assets, and costs $30 a month; Messari Enterprise which was built over the past two years in consultation with Coinbase and now has “several hundred” exchanges, custodians and investment firms spending about $625 a month; and the membership based disclosure registry, called the Hub, in which analysts work directly with the crypto-assets creators to provide increased transparency about the projects for investors. Forbes receives media access to the Pro services.
Hub participants include the team behind the $10.5 billion Chainlink (LINK) cryptotoken that helps bridge the gap between blockchain transactions and data off a blockchain, the $2.9 billion Maker token (MKR) that powers a decentralized finance (Defi) economy, and is in the process of onboarding the $2.6 billion Axie Infinity (AXS) gaming token. Forbes estimates Messari generated about $4 million revenue last year, and Selkis says the firm is on pace to grow by three to four times by the end of this year. The company has broken even for the past two years, he says,
“At the end of the day, we’re not trying to invent every single pipe and build things from scratch,” says Selkis. “So much as curate where the best in class data lives, and then try to build standards around the different providers in different parts, the information stack. The end result is hopefully being able to pull together the equivalent of an evergreen financial filing for any assets that is available in the markets.”
As part of the investment, Point72 Ventures partner, Adam Carson, joins Messari’s board of directors, along with former Thomson Reuters exec Jeff Clavier, who lead a $4 million seed round in 2019, bringing the total amount raised to $25 million. Selkis says Messari has yet to dip into the seed funding, and until this point has been staying afloat with revenue generated.
With the remaining funds, and the new infusion, Messari plans to triple the size of its engineering and product teams and to expand into new territory that could put it in direct competition with $20 billion Broadridge, a New York firm best known for creating traditional and blockchain software that lets shareholders vote. Specifically, Messari plans to start building governance tools for decentralized autonomous organizations (DAOs) that rely on automated workflows written directly onto blockchains instead of centralized management.
As Selkis describes the planned expansion: “It’s Uber for Dao Services. Integrations that make it easier for holders of these tokens to vote on-chain, or signal their support for proposals on-chain or ultimately even contribute their own human capital, their own labor, to participating in and submitting deliverables for some of these decentralized communities.” Selkis says he has no plans to follow his previous employer, CoinDesk’s footprints by expanding beyond data analysis into the more traditional news space. “We have similar functionality baked into our product,” he says. “But no, we’re not going to be running a news desk anytime soon.”
This is Cohen’s first major investment in crypto and puts him in line with a number of hedge fund titans who have recently entered the space, including Paul Tudor Joes and Alan Howard. Ironically, for a guy investing in a financial analytics startup, Cohen’s previous firm SAC Capital in 2013 plead guilty to securities fraud, and paid large fines. Since then, he’s been credited for inspiring the main character in Showtime’s show Billions. In 2020 he bought the New York Mets for $2.4 billion, and more recently as much as 15% of Point72 Capital’s value was reportedly lost as a result of bets against Gamestop. The hit was relative however, and Forbesestimates his wealth is still at about $16 billion.
Though a representative of Point72 Ventures declined to provide comment from Cohen, a May 2021 investor note hints at his imminent investment in crypto. “Steve and the Firm are always looking at ways to innovate and evolve our business,” the note reads. “We are constantly evaluating new market opportunities that support our mission of delivering superior risk-adjusted returns for our investors and offering the greatest opportunities to the industry’s brightest talent. We would be remiss to ignore a now $2 trillion cryptocurrency market.”
The investment appears to be well-timed, as companies like Messari are primed to capitalize on recent comments by numerous SEC regulators. In April crypto-friendly commissioner Hester Pierce, known as “Crypto Mom,” advocated for a so-called safe-harbor period where token issuers could operate for three years before being held accountable to certain requirements. In spite of such industry-friendly proposals, earlier this week newly appointed SEC chair Gary Gensler, doubled down on his predecessor Jay Clayton’s claim that every ICO is a security. If Gensler follows through with much anticipated, and feared, regulatory clarity, such data plays could make crypto financial information almost as valuable as cryptocurrency itself.
“There’s some [regulatory] comments and solutions that can be put forth,” says Selkis, “that don’t just cripple the pace of innovation within the industry, and instead build off of tools like ours, or Dune Analytics, or any of the other open source data companies that are trying to solve this transparency problem and make it easier for investors and market participants alike to actually understand what’s going on, feel like they’re operating on a level playing field, and demystify some of these projects.”
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
