
Former Harvard Money Manager Is Launching a Digital-Currency Hedge Fund - panarky
https://www.bloomberg.com/news/articles/2017-08-17/ex-harvard-money-manager-is-said-to-launch-digital-currency-fund
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adamnemecek
> The fund, which is registered in the Cayman Islands

Probably because of the beaches, pina coladas and what not, riteguise?

~~~
fnord123
Probably because of the favourable taxation jurisdiction. Capital is very
mobile and not there's usually not a strong reason to keep it in high tax
jurisdictions if it's possible to move it out.

Of course, it should have been taxed when it was earned by investors. And it
will be taxed again when investors receive and domesticate any dividends. That
part is the dodgy tax dodging issue. Not the issue of where the fund is based.

~~~
adamnemecek
I'm well aware of Cayman Islands taxes.

> Capital is very mobile and not there's usually not a strong reason to keep
> it in high tax jurisdictions if it's possible to move it out.

They are exploiting a loop hole.

~~~
sabalaba
From the perspective of taxpayers, having nations compete for the lowest taxes
and most friendly regulatory environment is beneficial. If there were a global
territorial monopoly on the production of security and rule of law, you would
likely find yourself with a lower quality of life.

~~~
adamnemecek
The problem is that I (and possibly you idk) can't decide to start paying
taxes in Cayman islands while still residing in the US. Why should a hedge
fund be allowed to do that? Why should a hedge fund that takes advantage of
the US social structure (funded by taxes) be allowed to not pay taxes in the
US?

~~~
ddeck
The fund doesn't benefit from the US social structure. The fund is just a
legal fence around a bunch of assets.

The investors in the fund are obliged to pay taxes on their income/gains in
their relevant taxation jurisdiction, which will be the US for US investors
and elsewhere for non-US investors.

~~~
adamnemecek
It's benefiting from the US structure indirectly. Investors into the fund are
definitely benefiting from the US social structure and hence the fund is also
benefiting.

I can also imagine that the fund has some US legal protection (don't quote me
on that).

> The investors in the fund are obliged to pay taxes on their income/gains in
> their relevant taxation jurisdiction, which will be the US for US investors
> and elsewhere for non-US investors.

So why is the fund getting a pass?

~~~
icebraining
_Investors into the fund are definitely benefiting from the US social
structure and hence the fund is also benefiting._

Fine. When will you start paying taxes to Greece and Italy for essentially
inventing the core civilizational structure the West is based on?

~~~
adamnemecek
> paying taxes to Greece and Italy

Haha, the EU is paying them more than enough already.

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code4tee
The Harvard endowment has suffered from poor management recently so not sure
if the headline is intended to make sure people think this is a good or bad
idea

~~~
audiometry
Yeah, this is interesting. They mentioned some turnover at the fund, and this
guy in particular only lasted for a couple years at Harvard.

I recall a few years ago how people talked about Harvard fund mgmt in reverent
tones as if they somehow were simply smarter and better than everyone else.
That caused some dissonance with me because a former boss's boss was someone
who Harvard Endowment hired, and in my experience he was definitely not
smarter and better trader than everyone else.

So I guess over time they find it as difficult to make returns as the rest of
us do.

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mysterydip
I misread the title as "is laundering a digital-currency hedge fund." While a
funny mental slip, on second thought it might not end up far from the truth
given some of the coin news the past few months.

~~~
Fifer82
I did the same thing on first read. Why did that happen?

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sremani
A quick search on interwebs yielded this advice,

>>If you will invest in a hedge fund, or require maximum transparency and
regulatory agencies, I usually recommend Cayman Islands or Luxembourg.<<

edit: the point of the post, is more or less answer to my own question. Why
cayman instead of Panama or some other place. May be I am not clear about it
in the post.

~~~
Havoc
For those not familiar with offshore lingo, transparency here means the legal
structure is essentially "look-through" almost as if you owned the underlying
investments. It's not transparency as in freedom of info.

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zitterbewegung
I remember attending a meeting of Hedge fund people and they had a concept
called liquid alternatives. Looks like this fund is positioning itself as a
liquid alternative.

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singhrac
I would call "former Harvard money manager" an anti-pedigree given its gross
incompetence this past year.

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xefer
Why would Harvard let these people go only to turn around and pay them fees to
invest their money as a separate entity?

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discombobulate
Ari Paul[0] helped run a 75B fund. This isn't particularly new. The clumpy
writer should probably sit down & figure out what's going on before shouting
from the rooftop.

[0]
[https://twitter.com/aridavidpaul?lang=en](https://twitter.com/aridavidpaul?lang=en)

Edit:

Here are 15 more hedge funds for the klutz. Please old media: keep up! Would
quite like NEWs.

[https://www.forbes.com/sites/laurashin/2017/07/12/crypto-
boo...](https://www.forbes.com/sites/laurashin/2017/07/12/crypto-boom-15-new-
hedge-funds-want-in-on-84000-returns/amp/)

Edit2: dpflan, I think I'm being throttled b/c of my VPN. Here's how I see it;

Personally, I think bitcoins will still increase, but the bet is more
symmetrical. There are other crypto assets which are asymmetrical bets (lose
1x, gain 100x). I focus on the latter.

~~~
ribosometronome
>There are other crypto assets which are asymmetrical bets (lose 1x, gain
100x)

Such as? Eth isn't going to increase 100x in any meaningful amount of time at
it's current price.

~~~
discombobulate
Monero. It's the largest 'privacy coin'. I think I could make a strong
investment case for it. I'll say this instead; Don't buy it unless you think
privacy's important. It's the most (crypto) nerdy coin, with a technical
community (r/Monero). I like to call it cypherpunk money.

As it's private it could get banned -- which could set in back in the short-
term. In the long-term, I think it's going to _be_ money (or something like
it). It could be a rocky ride!

Edit: A rocky ride with consequences (It's not a fairground ride). I want to
point that out.

Edit2: You could sell your investment, obviously. I talking about if you're in
for the duration.

~~~
nosuchthing
If a record keeping system inherently obfuscates the records, how do you audit
the records?

~~~
discombobulate
[https://www.reddit.com/r/Monero/comments/6cu2qm/is_it_possib...](https://www.reddit.com/r/Monero/comments/6cu2qm/is_it_possible_to_audit_the_number_of_coins_in/)

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discombobulate
Digital currencies like M-Pesa & Paypal?...

Oh, no he seems to be buying crypto assets; which have value because they're
decentralised. Silly me. I was confused by the author being confused.

Edit: if you're downvoting me for this comment then you don't know what you're
talking about. Happy to debate!

Edit2: seriously, there's a distinction to be made. One is a censorship resist
asset (which is why the trade-off of greater resources is made) & the other
isn't.

Edit3: explain to me why that isn't true & I'll change my position!

~~~
gedrap
> if you're downvoting me for this comment then you don't know what you're
> talking about. Happy to debate!

Well, it's just that it's fairly obvious what is meant by the headline given
the events of the past couple of years and your comment doesn't add anything.

~~~
discombobulate
The words are wrong. The definitions are incorrect. If you don't know the
difference then it does add something. That's called ignorance on your part.
I've explained the difference.

Edit: & it makes a difference b/c one implies government control & the other
control by the individual. Individual freedom. Privacy. Saftey from
persecution. Allowing freedom of speech -- without the risk of being defunded
by the government.

Edit2: Thank you for your comment.

~~~
icebraining
No, Bitcoin is still a digital currency, even if it's also a crypto-currency.

Also, Paypal is not a currency at all, it's just a bank and payments provider.

~~~
discombobulate
> No, Bitcoin is still a digital currency, even if it's also a crypto-
> currency.

I believe that's correct. Is the fund investing in non-crypto assets?
'Digital' implies the category 'digital' rather than 'crypto'. It's a subtle
difference, but important for when government/gov agencies frame the tech.

My 'Edit2' of the root comment is incorrect.

> Also, Paypal is not a currency at all, it's just a bank and payments
> provider.

I believe PayPal is seen as having an electronic currency:

[https://en.wikipedia.org/wiki/Digital_currency#Centralized_s...](https://en.wikipedia.org/wiki/Digital_currency#Centralized_systems)

Edit: I'll amend further. The headline is definitionally correct. It's not as
precise as I would like since it doesn't convey _exactly_ what the fund is
investing in. I think being precise in this matter is important b/c the word
use is used to frame the tech as yet-another-digital-thing vs a censorship
resistance technology (allowing privacy in an age of increased surveillance &
free speech where centralised companies have become the censors). The word
'crypto' has a certain connotation -- which is why I think the SEC won't use
it. Or other gov agencies refer to it as 'so-called' crypto currency.

It's also why Coinbase says 'digital currency', I think. There are ppl who try
& force the matter when they're being interviewed. Well, I'm forcing the
matter back.

\---

Edit2 (reply to icebraining):

icebraining, I'm being throttled. Here's my reply,

> A random line in Wikipedia does not make for good evidence about how
> something is seen.

At least I supplied evidence, vs your naked claim.

> Bloomberg is writing for a general business audience, using a more generic
> term is normal

Good journalists use 'crypto'. Here's an example from Forbes (general business
audience?),

[https://www.forbes.com/sites/laurashin/2017/08/10/coinbase-b...](https://www.forbes.com/sites/laurashin/2017/08/10/coinbase-
becomes-first-crypto-unicorn-raises-100-million-in-funding-amid-ico-
craze/#5ff6de1b4090)

> doesn't imply anything.

I think it does. I've explained above in an edit. You seem to be making a lot
of statements without backing anything up with reason.

~~~
icebraining
_' Digital' implies the category 'digital' rather than 'crypto'._

It only implies that for people knowledgeable enough to clear know what
"cryptocurrencies" are. Bloomberg is writing for a general business audience,
using a more generic term is normal, and doesn't imply anything.

 _I believe PayPal is seen as having an electronic currency:_

A random line in Wikipedia does not make for good evidence about how something
is seen. Especially as the line says they "will sell" their currency, which is
not something Paypal does currently.

Paypal is a bank, they hold money in existing currencies, they don't emit
their own.

