Topic: [Direct] BTC Growth - Forex Volatility Focus (Read 11217 times)

The main private offerings mentioned on the BTC Growth website are all closed for the time being. (See my comments toward the end of the first "froth" article for some notes on why.)

I'm not averse to working individually with folks who might want to get in touch directly, but this isn't a major focus at the moment.

Are these funds still available for purchase or are they all closed?

Just a quick follow-up for anyone who might be interested...

Back before this thread was polluted by MPOE-PR trying to find her bearings, I mentioned my "Selling the Froth" article which explained a simple hedging strategy for generating Bitcoin-denominated returns without needing to take a directional view on Bitcoin versus fiat. Today I published a one-month followup to that article, noting that the strategy has returned 14% during the last month.

RTFM. 

So how much was your fee, to compensate you for having lost 11.6% of your fools' BTC over seven weeks?

You're doing a splendid job of wasting time again.


Perhaps you have difficulty reading basic data and/or do not know the meaning of the phrase "return of capital", since anybody who grasps what it means would also recognise the irrelevance of the bot to that phase of the winding down of a fund.

Acquiring a basic level of competence before coming to this thread to pollute it would have helped you to understand that an initial value of 0.1 BTC and a final return of capital of 0.08838512 BTC represents a decrease of approximately 11.6%.

So why is the bot that streamed quotes all through the interval not agreeing with your retelling?

And please stop sounding like usagi.

PS. S.MPOE was trading low 80s in November and is trading high 80s now, that's be about as much as you lost, except it gained it rather than losing it (and this, not counting the dividends).

So...you did better than most of the scams out there, perhaps. While it's understandable why you'd be keeping your eyes on your own kin, it'd also be understandable if you stopped talking of Bitcoin finance.

You have no relation to it.

Sigh.  

The reality here is all a matter of public record for anybody who bothers to read, but by the looks of this drivel it appears that Mircea Popescu either can't be bothered to read or has so convinced himself of his own godliness that he thinks he can just make stuff up and the band of sycophantic pseudonyms will eat it up with stars in their eyes.

If you had bothered to read the original post in this thread, there's a nice summary there. The original BTC Growth fund raised 2000 BTC in around 30 hours when it launched on BTC-TC. You and MP make complete fools of yourselves by claiming otherwise.

And as for the subsequent performance of that fund, if you had bothered to check, you would have found that in fact, it dropped by a total of 11.6% from inception to final return of capital -- thereby outperforming every other comparable fund available, while the broader market tanked. Not only did it outperform all other comparable funds available at the time, but over the same period it also outperformed nearly all individual Bitcoin-denominated equities, and it outperformed them by a wide margin.

(In case you hand't noticed, the forex fund, which this thread is about -- you know, the actual fund which is supposed to be the topic of conversation for this thread, rather than the thread being merely a destination for empty-headed trolls to make themselves look silly -- is a completely different fund.)

You can add this to the previously mentioned list of occasions on which you have insisted on making a spectacle of yourself by starting an argument with me without even attempting to prepare yourself with an adequate grasp of the facts, and I therefore have wasted my time handing you your a** on a platter.

You and the other misguided troll have wasted quite enough of my time during the last 24 hours, so I'm sure you'll understand that I have no interest in wasting any more guiding you in the direction of material you could easily have found for yourself with just a click or two.

Derp. Here's the actual story:


You're just a scammer, if more pretentious than most. Not the sort that does it deliberately, but the sort that does it through sheer incompetence and metacognitive failure. Still, the net effect on your unfortunate "investors" is just about the same.

Back in the day usagi was the main provider of involuntary lols for the general Bitcoin public, and the prevailing view was that "so what if idiots lose a few Bitcoin, someone has to pay for our entertainment". With the entrance of more advanced psychotic cases such as Uppity Tortilla, who generally entertain for free or even pay for the privilege of amusing us, the bar has risen significantly. There's no niche left for you in Bitcoin really, you're neither funny nor rich enough to do anything for us anymore.

May I recommend joining some of the alts? For instance I hear wonderful things about Max Keiser's scamcoin, and you two definitely have the same sorts of mental issues so perhaps you could work together in that space.

Good luck!

  Nice duck and weave, post it on the forum so everyone can see just like you told the other dude what you hidding?

Read the website. If you don't understand something, get in touch directly. If you are not an accredited investor, it won't be worth your time.

Today I have observed much more than enough of both your current and historical treatment of other human beings on this forum. So, don't expect me to engage any further with you here on the forum merely because you've decided temporarily to try and have a "real discussion". Welcome to my "Ignore" list.

Ok lets have a real discussion

Are you a registered hedge fund?

Have you complied?

Are you abiding by the Compliance, reporting, records and complaints rules?

Yawn.

Your just proving my point about not being able to control yourself. Bet you respond with some great paragraph again lol

So the answer is no, then -- you don't have anything substantive to contribute to the topic of the thread?

Have you come over here to pollute this thread just because you're upset on behalf of your CryptoREI buddies? I can think of no other reason why a complete stranger, with no history of involvement in any of my funds and who has demonstrated no knowledge of me whatsoever -- and who has a long and scamworthy history to brag about (for those who don't know: here, or here or here) -- would bother coming here to hurl personal insults at me rather than trying to do something productive with their life.

If so, please do invite yourself over to their thread and share your deep and meaningfuls there instead.

 I learned how to deal with her/him in 2012, the substance of this discussion is your behavior as a business owner offering a security. If a you can not control your responses how can you control people funds?

Hey, way to raise the calibre of conversation -- bravo, you've really distinguished yourself. 

As I've said before, I prefer to focus on discussions of substance, and when someone is able to offer something of substance, I respect that -- whether I happen to agree with them or not. When someone insists on flapping themselves about in my face with some kind of personal attack or empty-headed condescension, I may respond to them briefly, but generally speaking I do not chase them around or belabour the point any longer than necessary to shake their sliminess off me.

So, did you have something worthwhile or substantive to contribute to the actual topic of this thread, or are you in the same category as MPOE-PR?

I find the fact that you are engaging in a "war of words with MPOE-PR" horrible business practice and would expect better behavior from a someone who holds Phd (Even if it is in philosophy  ) .

Bored now (again).

Time to run off back to your scientology thread and try to find your emperor something to wear -- or just keep hoping that nobody else really understands why he got himself into such a pickle trying to be an options market maker that he actually had to back out of the business completely.

Keep dreamin', it's a good dream.

If you spent any time at all studying the history of Bitcoin finance, and the practice of Bitcoin finance, instead of nursing the various narcissistic injuries MP indirectly delivered to your squishy, metastatic ego you'd know he's it. He's it. You lost your "investors'" BTC on Icbit? MP told you not to do that. This is what the man does, he dominates this field like no field was ever dominated in the history of human endeavors. Drop the pretense and the dog and pony show, Dr. ForeSkinHead, and start studying MP. He's your god, and your fumbling to come to terms with that makes you look all retracted.

Gosh, you are just so unbearably clever that I don't know how I ever got by without you.

Have you noticed, MPOE-PR, that each and every time you have attempted to start a substantive argument with me of any kind, I have handed you your a** on a platter? Check your own posting history and note how many times you have followed me around and insisted on starting something, only to wind up looking like...well, like someone who isn't garnering much positive PR.

You start arguments with me, I finish them. You start mud-slinging matches with me, I get bored, and so does everybody else.

The thing is, I -- like most people who know up from down in Bitcoin land -- don't actually spend any time at all thinking about you or talking about you or your puppet master. It's only when you insist on getting in people's faces that anyone actually bothers with you -- and hey, I get it, that's why MP pays you every month to try and drum up attention for his shrivelling empire. When you do start banging around and making a spectacle of yourself, I'm sorry to break it to you, but huge swathes of the folks who grok the finance end of things just laugh quietly and walk away.

The difference is, these folks have the class not to belabor the point, they have the class not to run around after you saying "hey, look at this joke I just made up about you, and I think it's really funny, and aren't I brilliant?", and they certainly have the class and the self respect not to bother writing up such drivel for public consumption and handing out the URLs to it. It's just an embarrassment to us all -- but most of all to you. It's just that you don't seem to realise it yet.

So, as I've told you pretty much every other time you've jumped up and down in front of me, begging for attention, if you have something worthwhile to contribute -- like, say, an actual cogent argument or a statement of fact -- then I'm all ears, I respect that. But if you're just here to piss all over somebody else's discussion thread, why don't you go somewhere else where you're actually welcome, or maybe start a fan club thread for yourself and perform in front of whatever audience chooses to attend?

So basically, you've got nothing and can't say so.

Isn't "Link Me" the Australian "get a job" site?  

I suspect MP's PR lackey could do with one of those -- especially now that MP has finally realised the gross inadequacy in his former approach to options market making, as discussed elsewhere. (Or maybe we're all to believe that market makers are supposed to get caught out accidentally transacting a boat load of options they're inadequately prepared for, and then supposed to scramble around in a panic for a couple of days after the fact as they try to hedge the position they accidentally got themselves into...yeah, that must be it...maybe that's how it's supposed to work... Or you know, maybe it's just those doggone data feeds...yeah, blame it on the data feeds, 'cause it certainly couldn't have been incompetence at the helm, could it?)

But why import the boringness of MP into this thread?  

(Edit: Oh, and to answer the question, in case it wasn't as obvious as it should have been: people actually doing real finance don't tend to hang out with a band of sycophants banging out mindless drivel on IRC and thus don't run around offering pointers to others to retrieve their archived gems of such mindless drivel.)

The silence is deafening.

Well at least the laughter continues.

Final NAV and Overview

For the month to 7 March 2014, the BTC Growth Forex Volatility Fund's final net asset value dipped to .0966 BTC per unit, turning our previous cumulative rise of 1.3% into a cumulative decrease of 3.4%.

We were negatively affected first by BTC.sx's failure to execute orders, as reported previously, and then even more so by ICBIT's flip-flop on excluding Mt Gox from March futures settlement.

On 18 February, ICBIT's administrators repeatedly refused to acknowledge the possibility that Mt Gox should no longer be considered a functioning exchange for the purpose of calculating settlement of the March futures contract, claiming that doing so would wrongly amount to moving the goalposts on the terms of the contract. (Of course, ICBIT's administrators have repeatedly moved many different goalposts, with little or no warning to traders using their platform.) For anyone with a view that Gox's problems would continue or worsen in the short term, this refusal to acknowledge the possibility of excluding Mt Gox from settlement calculation appeared to represent a clear opportunity, since the burgeoning volume and plummeting price at Gox all but ensured that settlement would be calculated on the Gox price and that the futures would therefore fall significantly.

Just two days later, however, ICBIT administrators announced that they would, after all, exclude Mt Gox from March settlement calculation. While this move brought clarity to a market undoubtedly puzzled by ICBIT's prior refusal to acknowledge the obvious, it was also strongly negative for those of us who had taken their previous refusal to acknowledge the obvious as a reliable indicator of the exchange's intentions with regard to the March contract.

As for BTC.sx, which was built atop Mt Gox, the service shut its doors to trading during the month; the fund ceased trading on the platform after the order execution failure, however, and was thus unaffected by the closure.

Fund Rollovers and Return of Capital

Registrations for a potential second round of the fund, as well as for the two companion funds -- one long-only, and one short-only -- closed on 6 March 2014.

However, in line with my comments at the end of the "Selling the Froth" article, I have elected not to proceed with these funds for the time being. Therefore, all capital will be returned to participants shortly. For those with new registrations of interest, please note that this means no bitcoins should be sent at this time.

(Incidentally, for anyone interested in the particular strategy outlined in that article, according to my calculations the approach continues to offer guaranteed profit up until a roughly 350% gain in the value of BTC vs. USD, assuming a 10% cost of fiat capital and excluding any additional gains from lending BTC -- at least, if you trust ICBIT. Even at a 40% cost of capital, it remains profitable up until a 200% gain in BTC vs. USD.)

I would like to thank all participants for the opportunity to offer this fund and also for their patience with the impact of the unforeseeable vagaries of the exchanges which the fund relied upon.

Folks following the BTC Growth funds -- and especially participants in the Forex Volatility Focus fund -- might be interested in a separate thread on an article I sent out earlier today called "Selling the Froth: A Simple Hedged Forex Strategy for Bitcoin-Denominated Returns". It covers a simple strategy which is relevant to the fund.

Any comments, etc. are welcome!

Just a quick note for folks following this thread directly: we've now opened registration for the second round of our Forex Volatility Fund, and I'll post a separate announcement shortly. (Registration will remain open thru 6 March at 12 noon GMT.)

In addition, we've decided to offer two companion funds at the same time, both operating along the same lines as the main FVF fund, but one offering long-only exposure and the other offering short-only exposure.

Finally, I've updated the document on risk factors for funds involving derivatives in order to highlight the fact that returns from a directional position established using futures can be impacted significantly by changes in contango or backwardation, quite apart from directional moves in the underlying spot market.

[Edit: corrected registration deadline to 6 March from 10 March.]

Link me.

Yawn.

You may take solace in the knowledge that among people actually doing finance of any kind, it is pretenders such as yourself and MP who are laughingstocks.

Well, you can take solace in the knowledge that among the people actually doing BTC finance, you're a prime laughingstock.

Problems With BTC.sx Order Execution

Here's an urgent warning to anyone who might be considering using BTC.sx today, 10 February 2014, as part of any multi-part/hedged position: don't. I've just waited over 10 minutes staring at an order status message saying "Awaiting Fill...", during which time no option was provided for cancelling the order. Finally, after around 11 minutes and under completely different market conditions, the order -- which was by that time worse than worthless to the fund -- finally executed.

As anyone who has been observing the markets in the wake of Mt Gox's announcement about the "transaction malleability" flaw in the underlying Bitcoin protocol will be aware, 10 minutes is one heckuva long time, especially when it comes to multi-part/hedged positions which you might expect to be able to enter and exit in a matter of seconds.

Note that for comparison, the Mt Gox trading engine lag as displayed by bitcoinity.org did not exceed 4 minutes at any time after the first minute or two of this wait. (I began following Mt Gox activity directly as soon as it became apparent something had gone spectacularly wrong.) And ironically, when the order finally executed and I immediately closed it for a loss, that happened immediately and without delay.

I have emailed Joe at BTC.sx hoping to find out what on Earth was going on, but I am posting this now in hopes it will serve as a warning to anyone else who might be wrong-footed by this surprising and frustrating "Awaiting Fill..." message.

Impact on the Fund

Due to the fun of repeatedly chasing my tail for several minutes, backing out of positions left unhedged by the BTC.sx delay, and eating the spread both at BTC.sx and at ICBIT as a result, the fund has taken a haircut of just over 2% -- enough to erase all our gains to date.

On a personal note, I am not at all happy about this outcome.

NAV Update

For the month to 7 February 2014, the BTC Growth Forex Volatility Fund's net asset value rose to .1013 BTC per unit, an increase of 0.837%, or approximately 10.5% on an annualised basis.

Trade in BTC versus the dollar and other currencies during the last month has been largely lethargic and directionless, presenting the fund with few strong opportunities. The fund is currently positioned cautiously, with a bias that is slightly long on a net basis.

Arrangements for Fund Rollover and the Fund's Second Round

This first round of the Forex Volatility Fund will wind down on 7 March, and by default all capital will be returned to participants at the address they specified when registering for the fund.

A second round of the fund will be offered, to commence in March, subject to sufficient participation. Current participants who would like their existing positions to be rolled over into the second round must specify their preference to do so by Friday 21 February 2014 at 12 noon GMT. All participants are urged to review and confirm the rollover setting in their account interface prior to that date.

Should the fund's second round go ahead, it will proceed under the same terms as the first round, as outlined on the BTC Growth website, including the initial net asset value for calculation purposes of 0.1 BTC per unit. New units in the fund's second round will therefore be allocated to participants rolling over from the first round according to the value of their position in the first round. Fractional balances below 0.1 BTC will be held separately and returned or rolled over at the conclusion of the second round. For example, if a participant holds 50 units in the first round, which at the conclusion of the first round are worth 5.15 BTC, they will hold 51 units in the second round, with the additional 0.05 BTC returned when the second fund finishes operation.

No subscription fee will be charged for fund rollovers.

New Participants in Round Two of the Forex Volatility Fund

The second round of the fund will open shortly for new participant registration, under the same terms as the first round, which are available here:

BTC Growth - Forex Volatility Focus

A separate announcement will provide further details when new registrations open for round two.

Market Environment and Exchange Challenges

For much of the month, the fund has maintained a bias that is slightly long on a net basis, partly with the view that widespread concerns about the impact of changes in Chinese regulations taking effect at the end of January were both overblown and already priced in. But while no meltdown has occurred, neither has any resumption of an uptrend in Bitcoin versus the dollar or other currencies.

The fund has no direct exposure to Mt. Gox and thus was impacted only indirectly by the broader market's negative reaction to the exchange's abrupt announcement on 7 February that it was "temporarily" and immediately halting BTC withdrawals.

Next Up

Barring any unforeseen major market events, we will plan to return with an update at or shortly after the conclusion of this first round of the fund.

This is just a quick note to let everyone involved with our fund know that the BTCGrowth.com site as well as several other of our sites are currently down due to what appears to be a network outage at the server's data centre. In addition to the disappearing sites, this also means that I will not, for the time being, receive emails sent to any of my usual addresses.

No Bitcoins are stored on the server.

Many thanks for your patience, and we hope to be up and running again soon.

NAV Update

For the month to 7 January 2014, the BTC Growth Forex Volatility Fund's net asset value rose marginally to .1005 BTC per unit, an increase of 0.5%, or approximately 6% on an annualised basis.

Due to my recovery from a back injury on the Monday preceding the fund's launch, for much of December the level of attention I was able to provide the fund was less than I would have liked. As a safety precaution, I therefore kept the fund's exposure to the market almost entirely hedged, meaning that while small gains continued to trickle in, the risk of loss due to sharp market movements was minimal.

As a result of my reduced availability during much of the month, I have discounted the fund management fee for the period by 50%.

Exchange Challenges and Moving Goalposts

The fund relies primarily on Bitfinex and ICBIT, but it has also had exposure to BTC.sx and indirect exposure to BTC-e.

During the period, Bitfinex rolled out a few changes which have impacted daily trading, most notably an altered interface for displaying available liquidity swap interest rates. While this generally improves margin borrowers' efficiency, it does not help the fund in any way, since it is inefficiencies which provide more opportunities for us.

ICBIT, however, has been far worse for the fund. In addition to widespread reports of trader defaults on 8 December and 19 December, which may have reduced our gains, and repeated problems with site responsiveness and reliability, the exchange also chose Sunday 5 January to introduce (quietly and without any official announcement, unless we count a comment in the troll box) it's most trader-unfriendly "improvement" yet: variation margin will no longer be assigned during twice-daily clearing and will simply float as unrealised profit or loss until the position is closed, via trade or settlement. A handful of participants who previously found it hard to track their cost basis under the normal (by futures standards) system of variation margin seem to like the change, but apart from those challenged by cost basis mathematics, it's not clear to me how this change could bring any benefit whatsoever to participants; for the exchange itself, by contrast, the value of indirectly levying steep new fees to realise gains is crystal clear.

Ironically, BTC.sx chose the same day to give just over three hours of notice that it was suspending trading for two days to perform platform upgrades. One potential benefit to the upgrades is the appearance in the trading interface of a mechanism for altering the stop level. The fund typically uses the site under only one scenario, specifically to make small delta adjustments to positions already established on other exchanges in response to expansion or contraction of contango in the futures market. (This is exactly analogous to adjustments traders make in ordinary stock markets to ensure that options positions move in the desired ratio relative to stock positions.) Because the site has stuck to narrow fixed stops -- and because it is insanely expensive to hold a position longer than 24 hours -- it has remained largely unsuitable for serious investment activity. In fact, the fund's NAV was negatively impacted twice during the month by the site's 8% stops, resulting in our being stopped out from a position that was otherwise profitable, and with knock-on effects that followed for the rest of our hedging strategy. The introduction of adjustable stops may reduce this problem and make the site more useful going forward.

Finally, the fund has been indirectly impacted by the recent change of BTC/USD exchange volume leadership first to Bitstamp and then to BTC-e, of all places. It remains to be seen whether the emergence of BTC-e as a volume leader will be sustainable, whether it is a temporary side effect of promotions connected with the site's introduction of MT4, or whether the availability of MT4 will actually keep what has long been regarded as a second-tier exchange at the top of the volume table. This matters to the fund because ICBIT's most liquid futures contract -- March 2014 -- is settled with reference to the BTC/USD exchange rate on the exchange with the highest volume. Since Mt. Gox, the former volume leader, trades around 14% higher than BTC-e and around 12% higher than Bitstamp, the current number two, the change from Gox for settlement has had a huge impact on the futures market. For the fund, this change has been negative.

Next Up

Barring any unforeseen major market events, we will plan to return with an update in approximately one month's time.

Please note that by default, participants' capital will be returned to them when the fund finishes in March. Participants who would prefer that their capital be retained for rollover into a second fund, should we elect to offer one, will need to indicate this preference in their account interface at least two weeks prior to the fund's closure. To date, most participants have indicated they would prefer to roll over their capital, but this preference can be changed up until two weeks prior to closure. The next report will include a note of the specific date on which we'll take a snapshot of participant preferences so as to manage the winding down of the fund.

Seems like and better things are in store for all involved.  Hope things work out for the best and maybe one day I can join.

Good on you for spotting it though; it would have been a nice lock-in return. I expect there will be other opportunities.

I'm pleased to say that our intial private offering went off without a hitch, and the Forex Volatility Fund is now underway.

With the requisite admin tasks completed over the weekend and some initial fund allocations taking place on both Saturday and Sunday, we're now on track for the fund's three-month period of operation to finish up on 7 March 2014. Barring any major news before a month has passed, I'll plan on making an initial report during the week of 6 January 2014.

As some of you will probably be aware, the ICBIT exchange drastically altered its margin rules just days before the fund launched, and the effect has been to reduce many of the opportunities which had previously existed to capitalise on the relationship between contango^* in the longer-dated futures contracts and interest rates in the spot market. Going forward, this will make the fund's job more challenging, but hopefully the rule changes will also reduce the risk of default from counterparties on the losing end of futures contracts when variation margin is assigned. (As recently as just yesterday, some traders apparently defaulted due to the sharp fall in BTC vs. USD, and unfortunately such losses wind up being distributed against those of us who were neither in default nor on the losing end of the relevant contract.)

^*I'm using this term loosely (and wrongly), as seems to be the custom in Bitcoin futures, to refer to futures trading at a premium to spot; everywhere else in the world, contango and backwardation refer to the difference between futures and the expected spot price at settlement, not the spot price right now.

As I understand it, though, the exemption is specifically for commercial paper with maturities of 270 days or less -- and this fund would not pass the duck test. I.e., it doesn't look like commercial paper, and it doesn't act like commercial paper, so I think it would be hard to make the case that it is commercial paper.

The initial private offering has now closed, incidentally (with registrations of interest having been open for one week up until last Thursday), and we'll shortly be getting underway with the FVF fund.

At least one person missed the offering announcement, I'm afraid, but unfortunately the activity in the Securities section lately seems to be dominated primarily by one of two things: 1) people trying to recover funds from an old "investment" that was poorly managed or an outright scam, or 2) people trying to attract funds for a new "investment" that is poorly managed or an outright scam. As a result, it's easy for everything else to get drowned out.

hey Greg, I saw your fund operates for only 3 months at a time, in the United States "securities" that last less than 270 days are exempt from the securities act, and therefore any other SEC regulations don't apply either, such as 'self certified' statuses

feel free to verify that

but you can offer promissory notes, or commercial paper to Americans.

Many thanks, and a belated Happy Thanksgiving to you as well. 

Several folks have now registered their interest in participating in the fund, despite the naturally quiet day yesterday. (Unfortunately, the announcement itself has now slipped off the front page of the Securities section, but hopefully those interested will still get to hear about it via this thread instead.)

Awesome!  Good luck Greg and happy thanksgiving!

I've now posted a separate announcement that registrations of interest via the BTC Growth site will be open for the next week:

https://bitcointalksearch.org/topic/btc-growth-forex-volatility-focus-initial-private-offering-details-350281

If we allow "identity" to encompass non-real world identity -- say, a pseudonymous user name on a discussion forum -- then sure, you might at a stretch say there's some sort of quasi-accountability there, in the sense that behaviours become associated with the pseudonymous "identity" rather than just being chalked up to an entirely anonymous entity.

But to the extent that the sort of accountability that I think people will be concerned with -- especially the large set of people who have lost money to unaccountable, pseudonymous operators wearing badges of "trust" bestowed by the Bitcoin forum software -- is real world accountability, it seems to me pretty darned difficult to achieve that without real world identity.

There's a world of difference between knowing, for example, that a person with the pseudonymous "identity" of "ExampleScammerDude" is responsible for stealing a bunch of cash, and the real person behind "ExampleScammerDude" being in any way accountable for having stolen a bunch of cash.

Identity does not have to be legal name or real world.

I really appreciate the situation and the impact that these types of restrictions have on most of us.

In the current climate, however, at least as far as I can tell, a direct fund provider can either be identifiable and accountable, or a direct fund provider can be be open to all -- but not both at the same time. Find a direct fund provider who has come clean about their own identity, is accountable for their actions, and who doesn't place restrictions on participation, and you've found a ticking time bomb. Find one that is able to remain open to all by insisting on their own anonymity, and you'll find one that is ultimately unaccountable -- since ultimately, without identity, there is no accountability.

That very problem is something to ponder when reading the spate of new "fund" announcements from would-be currency arbitrageurs. (The other thing to ponder about those is the apparent universal failure of their promoters to grasp that arbitrage is, by definition, risk-free profit. To the extent that a supposed "arbitrage fund" is not risk-free, it is not an arbitrage fund at all.)

I already read that and it states:

I don't think I am any of those.

1. Nope I am a person
2. Nope
3. Nope
4. Nope, I guess I could make my own security trading company?
5. Nope, I guess I could start my own business?
6. 1$ Million dollars, I wish
7. agaian I wish
8. again I wish

Based on that criteria I do not qualify to invest in your fund. I really would like to but I do not see any way I qualify under any of those 8 options.

An informational notice from the US Securities and Exchange Commission is available here, summarising the definition of the term 'accredited investor' from Rule 501 of Regulation D. Prospective participants in the prospective fund who are US persons are asked to self-certify their status as accredited investors prior to participating.

So as a US citizen I would need 1 million in net assets to invest in this fund? Am I reading that correctly? I would really like to invest but there is no way I have that money sitting around..

Not to worry -- the subscription fee occurs only once, in connection with the manual account setup, and without any additional fees for rollovers.

You realise the PIF is much safer, of course? 

We'll see...

The question has even been raised as to whether someone could participate in the fund and operate a pass-through to an exchange, and of course they could do so. However, I think the recent shenanigans with Havelock and their "investment fund" have left many people even more skeptical about becoming involved with exchanges.

Hopefully this will garner enough interest to make the fund a reality.  Also, I totally agree about people being fed up with the bitcoin asset market.  After the chaos of the last couple of months, this new venture of yours is the only asset I've even thought about investing in.

Many thanks for your kind words and encouragement.

Judging by the BTC prospective participants have been talking about placing in the prospective new fund -- just going by emails and the occasional PM -- it's not clear yet whether there will be sufficient interest to go ahead with it, but we'll see.

(I know many people are still struggling to get their capital back from Ukyo, Graet, TF's fund and others, not to mention the aftermath of TF's claimed "hack"; meanwhile, many people are still smarting from losses when the broader market tanked. I think folks in general are pretty fed up with the Bitcoin asset markets as a whole -- and I can understand that.)

Awesome!  Good luck with this new venture Greg!  I have nothing but good things to say about how honestly and competently you handled BTC-Growth on BTCT.CO and wanna be first in line when this thing gets ready to launch.

Cheers!

Several folks have been in touch to ask variations on the same underlying question -- namely, whether I'll be offering another fund similar to the original BTC Growth, one providing exposure to listed equities, derivatives, listed debt, and so forth.

I'm observing carefully, but at the moment, the space of opportunities in equities or debt offering what I would consider an attractive balance between risk and reward is fairly sparsely populated. In addition, the lack of equity options on exchanges like Havelock makes it all but impossible to hedge individual position risk effectively. Thus, if I were to offer a similar fund, in practice it would currently be heavily skewed toward forex derivatives anyway, given the relative paucity of attractive alternatives elsewhere.

The recent movements in the value of BTC against other currencies have opened up trading opportunities which, in my view, far exceed what is available from individual equities and debt -- at least for the time being.

Notably, exposure to forex derivatives was a central part of the original BTC Growth fund almost from day one, and that exposure provided an effective counterbalance to offset the fund's exposure to listed equities and listed debt.

28 November 2013

The document Risk Factors - General was updated to include a section on rule changes on exchange platforms.

26 November 2013

The documents Risk Factors - General and Risk Factors - Funds Involving Derivatives, Including Forex Futures have been updated with a section on risk tolerance and diversification (for the former) and sections on distinguishing forex futures activities from forex arbitrage and on diversification and the risk of derivatives (for the latter).

25 November 2013

The original full document has now moved to the BTC Growth site itself, along with the full terms and conditions and risk factors.

I'd like to share for discussion an initial draft for a new forex-focused fund which my company is considering operating under the BTC Growth umbrella.

I've now removed the original full document, retaining here only a quick history of the original BTC Growth Fund (now closed), the Executive Summary for the proposed new fund, information about the fund provider, and the brief FAQ. The full draft document is now available here on the BTC Growth site itself:

BTC Growth - Forex Volatility Focus

Updates to this post will be noted in the post immediately following this one.

For those familiar with the original BTC Growth fund, the principal differences distinguishing the original fund from the new are:

• The fund will focus on forex volatility, with no direct exposure to Bitcoin-denominated equities, equity options, or listed debt, and with correspondingly limited diversification.
• The fund will operate for 3 months at a time, with an option for rollovers into future periods.
• The fund will operate on a private, direct basis on behalf of a small set of participants strictly limited in terms of their total number, their minimum level of participation (5 BTC) and, for US or UK participants, their self-certified status.
• The fund will require a one-time 0.1 BTC subscription fee.

This forum post is not an offer to sell, nor a solicitation to buy, any security; nor is it an invitation to participate in this strictly limited, small private fund.

Questions, comments, and feedback are very welcome, though!

Background: Summary of the Original BTC Growth Fund

The original BTC Growth fund was a hedge fund-style service provided to BTC-TC from mid-August thru mid-October 2013. (See the BTC-TC listing here or the original forum announcement and discussion here.) The fund offered exposure to Bitcoin-denominated debt and equity, and it employed derivatives to hedge risks associated with this exposure as well as to generate returns independently. The fund also provided capital to exchanges, and it constructed positions designed to exploit volatility in the value of Bitcoin versus other currencies.

Within around 30 hours of launch on BTC-TC, the original fund was capitalized with 2000 BTC.

As we all know, the broader market for Bitcoin-denominated assets cratered not long after the fund's launch, with many individual equities falling by 75% or more during the following months.

For participants in the original BTC Growth fund, however, the benefits of operating as a hedge fund-style offering rather than a "buy into a rising market and hope everybody wins" offering became apparent very quickly. While BTC-TC's closure announcement marked a temporary low point for the fund's value, it then climbed sharply, regaining much of its lost value within just days of the announcement. While other funds which remained in operation continued to squander shareholder value, BTC Growth completed an orderly liquidation and returned capital to participants in mid-October, its net asset value per virtual 'share' having decreased by a total of 11.6%.

From initial offering to final return of capital, this loss -- small in relative terms -- means that during the period, the fund appears to have outperformed all other comparable funds and nearly all individual Bitcoin-denominated equities by a wide margin.

Executive Summary of BTC Growth - Forex Volatility Focus

Operating as a private hedge fund-style service, the BTC Growth - Forex Volatility Focus fund aims to achieve modest capital growth denominated in Bitcoin.

The fund's primary focus will be the construction of moderately leveraged positions designed to profit from volatility in the value of Bitcoin versus fiat currencies or other cryptocurrencies. The fund may also provide capital to exchanges, and it may engage in limited lending directly to businesses or individuals active in the Bitcoin economy.

The fund is not securitized, it is not exchange traded, and individual stakes in the fund are not transferable. Participation in the fund is not available to the general public and will be administered on a strictly limited private basis directly with individuals who have registered an interest with the provider.

The fund is intended to operate for an initial period of 3 months, subsequent to which each participant's capital will be returned to them unless 1) the fund provider elects to repeat the offering via a follow-up fund into which participants' capital may be rolled over, and 2) that participant has specifically indicated at least two weeks prior to the fund's liquidation that they would prefer their capital to be rolled over.

Being a manually administered private fund which is not traded on an exchange, the fund will be limited to 20 or 25 total participants; participation in the fund will be available from a minimum level of 5 BTC per participant.

The fund employs a once-only subscription fee of 0.1 BTC and the 'two and twenty' fee structure common to the hedge fund industry, subject to a high-water mark. From the subscription fee, 10% will be refunded as part of the fund's security protocol.

This document should be read in conjunction with the fund's Risk Factors and Terms and Conditions, provided separately.

This fund is unsuitable for potential participants for whom the full documentation is in any way 'TL;DR'.

This documentation is not an offer to sell, nor a solicitation to buy, any security; nor is it an invitation to participate in this strictly limited, small private fund.

About the Fund Provider and Fund Manager

The fund will be provided by Mulhauser Consulting Ltd., a company incorporated in the United Kingdom eleven years ago and which has been in continuous operation ever since.

The fund will be managed by Dr Greg Mulhauser, the company's founder and Managing Director. In other areas of its business, the company works with a team including both volunteers and paid employees and consultants, but for the purposes of this service, fund management will be handled entirely by the Managing Director.

With educational background in mathematics, philosophy, and later in mental health, Dr Mulhauser has worked at the Pentagon, UK universities, and telecommunications giant BT. Originally employed at BT as a research scientist in cognition, complex systems and biologically inspired computation, he was also responsible for curiosities such as the Lattice of Extended Turing-Style Automata, which he designed as a novel computational architecture for implementation with FPGAs in a fashion similar to cellular automata. He later left the Complex Systems Laboratory for business strategy roles and advised on corporate venturing and on derivatives strategies associated with M&A projects. He contributed to the company's Asian portfolio management, assessed flotation and alternative demerger options for its wireless operation, and developed strategy for its £500 million indirect channels business. In 2002, he left a strategic partnering role in security and mobile technology to found his own firm, securing consulting contracts ranging from ground-based air defence systems at Northrop Grumman and the UK Ministry of Defence to internal communication at the UK's national Police IT Organisation (PITO). A British Marshall Scholar and Fellow of the Royal Society of Arts, Mulhauser lives in Devon, England with his wife and daughter.

Additional information about the fund manager specifically regarding his investment background is available from one of the newest sites in the company's portfolio, Psychological Investor.

Potential participants can get something of a flavor of the fund manager's general approach to investing from the same site, along with a small selection of his recent articles specifically about the Bitcoin economy.

For further background, the archive section of the Mulhauser Consulting site also includes work on business strategy development and even older research work on topics like algorithmic information theory, computability and recursion theory dating back to the 1990s. (Greg Chaitin, who as a teenager independently invented algorithmic information theory alongside Kolmogorov and Solomonoff, described the fund manager's first book as "One of the first serious applications of algorithmic information theory; fun to read!")

Posts by the fund manager on the Bitcointalk.org forum can be found here.

As with ordinary hedge funds, in which the General Partner typically invests alongside Limited Partners, the fund manager intends to participate in the fund, helping to ensure alignment between his interests and those of the fund. Note, however, that this strictly limited, small private fund is not structured on the General Partner/Limited Partnership model.

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Mini FAQ

Having dispensed with the lengthy Not-So-FAQ of the original BTC Growth fund, here are brief answers to a few questions I expect would otherwise have come up:

Q: Why isn't this going to be listed on an exchange?

A: I'm always open to suggestion, so if and when someone comes up with a credible and reliable exchange platform which is fully accountable both to its users and to relevant laws and regulations, I'll be very keen to learn about it. (Since I take it that without identity, there is ultimately no accountability, one prerequisite for an exchange platform which is fully accountable would be coming clean about the identities of all those involved.)

Q: Even if it's not going to live on an exchange, why isn't this securitized/tradable/transferable/more convenient?

A: From a regulatory standpoint, offering publicly tradable assets is a whole different kettle of fish than offering a private Bitcoin management service. This fact might figure into the decision by many issuers of more conveniently tradable securities to remain unaccountable by insisting on anonymity. For my part, I think anonymity for individual consumers is great, but for profit-making businesses setting out to offer Bitcoin-based services, I think it's more important to be accountable.

Q: Why are there limits in place on the number of participants and on the minimum participation level for each?

Q: Being a manually administered, direct service, I cannot feasibly manage a large number of participants each with relatively lower levels of involvement in a fund. The UK regulatory framework also treats funds differently according to their number of participants, and it treats funds differently when they are restricted to certain types of participants.