George Soros Increases Crypto Exposure - Fund Invests in Marathon Debt, MicroStrategy Shares But Shorts Silvergate

Institutional investors still seem to be cryptocurrency industry despite the turbulence that rocked the space. According to a filing made with the US Securities and Exchange Commission (SEC), Soros Fund Management is doubling down its investment in the cryptocurrency sector.

Billionaire George Soros increases crypto exposure

The 13F SEC filing shows that the investment company has invested in more crypto companies. The Soros Fund Management company invested in these companies before the end of last year.

Among the companies that Soros has invested in is crypto mining firm Marathon Digital Holdings. The investment firm bought $39.6 million of convertible debentures from the crypto miner. These debentures can be converted into stock after a given period.

Soros has also invested in one of the largest companies in the cryptocurrency sector, MicroStrategy. The filing shows Soros Fund Management owns call and puts options on 50,000 MicroStrategy shares. Before this filing, Soros had disclosed to the SEC that it only held put options for 50,000 shares.

Besides the call and put options, the fund management firms also hold around $200 million of preferred shares in MicroStrategy. MicroStrategy is one of the largest Bitcoin holders and among the few public companies that list Bitcoin on its balance sheet. Holding shares in MicroStrategy is akin to holding Bitcoin, as it exposes the trader to the asset.

George Soros appears to be taking a different route from the one taken by veteran billionaires such as Charlie Munger. Recently, Munger published an open letter urging the United States government to ban Bitcoin as China did. He also recently said that the people that support Bitcoin are “idiots.”

In the open letter, Munger said that cryptocurrency was “a gambling contract with a nearly 100% edge for the house entered into in a country where gambling contracts are traditionally regulated only by states that compete in laxity.”

Soros is betting against Silvergate

Despite increasing exposure to some of the largest companies in the cryptocurrency sector, the fund seems to be betting against Silvergate bank. The crypto bank has been facing turbulent times because of its association with the bankrupt cryptocurrency exchange FTX.

The recent SEC filing shows that the fund purchased put options on 100,000 shares of the Silvergate bank. These shares were worth around $1.74 million, showing that the fund has taken a short position against Silvergate. Those who buy put positions assume that the shares of the company are going to drop.

The position that Soros has taken on Silvergate shows that investors might be losing faith in the bank. This month, the fraud division at the Department of Justice launched investigations against the company over its association with the collapsed cryptocurrency exchange FTX and its sister company Alameda Research.

Silvergate is also under pressure by regulators to disclose what it knew about the operations of Sam Bankman-Fried’s crypto empire. After the collapse of FTX, Silvergate witnessed a notable spike in withdrawals, forcing the bank to sell off some of its assets at a loss to fulfill the withdrawal requests.

Besides making investments in cryptocurrency, the fund also purchased other stock in companies such as Tesla. It bought 42,000 Tesla shares last quarter, increasing its stake in the EV maker by 47%.


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