Michael Bodley

Longtime TradFi hedge fund operator Hunting Hill Global Capital is doubling down on cryptocurrency trading — &nbsp;which has not been common knowledge on The Street —&nbsp;according to three sources familiar with the matter.&nbsp;



The New York firm is closing in on a number of key hires for just that, sources said: at least two former Genesis executives, plus at least one senior addition out of Galaxy Digital.&nbsp;



There’s no shortage of interest in the ebbs and flows of talent from Genesis, the <a href="https://blockworks.co/news/genesis-halts-lending" target="_blank" rel="noreferrer noopener">struggling</a> crypto lender and trader, in the toughest job market in recent memory. Employers and jobseekers have been stung by plummeting payrolls. For the few with dry powder, though, there’s an upside: Talent exceeds openings. 



Hunting Hill tapped Martin Garcia, who spent more than half a dozen years at Genesis, as chief investment officer for its emerging crypto-only affiliate, Hunting Hill Digital, sources said. Garcia, in charge of the unit’s hiring, is evidently looking to use that job market to his advantage.&nbsp;



Garcia had been biding his time since August 2021, when he left Genesis as one of its longest-tenured staffers. He’s been recently building out the “plumbing and piping and infrastructure,” a source said.



Garcia has teamed up with Adam Gueren, founder and chief investment officer of Hunting Hill proper. Guren is taking on the role of chief executive for Hunting Hill Digital in one indicator of his conviction in digital assets. Another Hunting Hill trader, Adam Genello, is set to join the new fund as a portfolio manager.



<h3>Crypto has tanked. It may still be tanking. Why launch now?</h3>



The rationale, sources said, for putting the fund in play sooner rather than later? Mammoth market dislocations brought into being by the collapses of some of crypto’s largest players.&nbsp;



“The market has been going kind of crazy, and [Garcia and Guren] didn’t really see the right opportunity” until recently, a source said.&nbsp;



Hunting Hill, as it turns out, has been in crypto since February 2020, via the launch of Hunting Hill Crypto Opportunities Fund — long before scores of Wall Street peers followed suit. While its performance since isn’t known, two sources said results have been above average, adding that Guren wouldn’t otherwise greenlight another fund.&nbsp;



The firm declined to comment. Sources were granted anonymity to discuss sensitive business dealings.&nbsp;



<h3>An effort to mesh TradFi, crypto investing tactics</h3>



Hunting Hill has, since its 2010 inception, expanded its core arbitrage mandate to include additional strategies, one source said. Digital assets are now up. It ran $718 million of gross assets at the end of 2021.&nbsp;



That evolution plays into the narrative of the multi-strategy fund operators increasingly cornering the market for limited partner dollars. A number have delivered standout showings throughout 2022’s frothy stock, bond and commodity markets.



And a few such hedge fund <a href="https://www.thestreet.com/crypto/bitcoin/hedge-fund-millennium-traded-gbtc" target="_blank" rel="noreferrer noopener">behemoths</a>, including <a href="https://blockworks.co/news/steve-cohen-building-out-crypto-investment-firm" target="_blank" rel="noreferrer noopener">Steve Cohen’s</a> Point72, have, like Hunting Hill, taken the crypto <a href="https://blockworks.co/news/point72-asset-management-in-early-innings-of-big-crypto-push" target="_blank" rel="noreferrer noopener">plunge</a>.



The open-ended Hunting Hill Crypto Opportunities Fund now has about $50 million in assets under management, the source said.&nbsp;



The yet-to-be-named new entity has its launch penciled-in for the end of first quarter or beginning of the second. It’s too early to get a pulse on capital-raising aspirations, two sources said, but conversations with would-be backers are already in play.&nbsp;



Garcia and Guren are vying to mesh the “traditional team at Hunting Hill and more crypto-native folks, as well,” one source said. To that end, Garcia before Genesis spent time at illiquid asset specialist SecondMarket.&nbsp;



The firm typically trades bonds, derivatives, ETFs and equities. Its in-house products tend to pay off when markets chop and churn — likewise the bar for its crypto dealings.&nbsp;



The specifics of Hunting Hill Digital’s strategies aren’t settled. But it’s not going to be a quant shop, one source said. That said, it could look to acquire a crypto quant specialist at some point — part of a diversification push.



At the moment, there’s all but untold alpha to be derived from crypto’s many corners by savvy traders armed with opportunistic strategies. And there’s real promise in buying into beaten-up spot assets and startup stakes in a recovery wager.&nbsp;



Still, Hunting Hill has quite the tricky fundraising road ahead, one source said. The largest of limited partners — the likes of top family offices, pensions and endowments — had been engaged in serious due diligence on crypto portfolio managers in the bull market.&nbsp;



Scores have since backed out or put those prospects on the back burner.&nbsp;



“It’s an interesting launch,” the source said. “But they’re looking at this as a four- or five-year play.”



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Ex-Genesis, Galaxy Execs Said To Helm Hedge Fund Hunting Hill’s Crypto Play

Shalini Nagarajan

<div id="highlights-block_63185147d614a" class="highlights">
 <ul>
 <li>Matrixport is a British Virgin Islands registered cryptoasset financial services provider</li>
 <li>Three Arrows Capital owed $3.5 billion to 27 crypto companies at the time of its bankruptcy</li>
 </ul>
 
</div>



Cryptocurrency hedge fund <a href="https://cms.blockworks.co/tag/3ac/" target="_blank" rel="noreferrer noopener">Three Arrows Capital</a> (3AC) declared <a href="https://cms.blockworks.co/3ac-files-for-bankruptcy-as-co-founders-location-unknown/" target="_blank" rel="noreferrer noopener">bankruptcy</a> two months ago, so it was eyebrow-raising when on-chain analytics firms reported Tuesday it was still executing relatively hefty transactions. Those initial reports turn out to be wrong.



On-chain data showed a <a href="https://etherscan.io/address/0x23237b849d0e6f392573ee6ae9e3b1256f058143" target="_blank" rel="noreferrer noopener">wallet</a> identified by on-chain analytics firm Nansen as belonging to 3AC withdrew a total of $45 million from deposits previously staked on Curve Finance and Convex Finance.&nbsp;



More specifically, the wallet removed about 20,945 staked ether ($33.3 million) from Curve. From Convex, it retrieved 2,421 wrapped ether ($4 million), 202.7 wrapped bitcoin ($4 million) and 4 million USDT, according to data from security firm PeckShield.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true"><a href="https://twitter.com/hashtag/PeckShieldAlert?src=hash&amp;ref_src=twsrc%5Etfw">#PeckShieldAlert</a> The address labeled as 3AC withdrew ~20,945 <a href="https://twitter.com/search?q=%24stETH&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$stETH</a> (~$33.3M) from Curve Finance and ~2,421 <a href="https://twitter.com/search?q=%24WETH&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$WETH</a> (~$4M), ~ 202.7 <a href="https://twitter.com/search?q=%24WBTC&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$WBTC</a> (~$4M) and ~4M <a href="https://twitter.com/search?q=%24USDT&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$USDT</a> from Convex Finance. <a href="https://t.co/8R3J0IFtP1">https://t.co/8R3J0IFtP1</a> <a href="https://t.co/WSZI1iR05X">pic.twitter.com/WSZI1iR05X</a>&mdash; PeckShieldAlert (@PeckShieldAlert) <a href="https://twitter.com/PeckShieldAlert/status/1567179464370712577?ref_src=twsrc%5Etfw">September 6, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



The labeling of 3AC’s wallet by Nansen did not make it a certainty. In response to skepticism over the firm’s labelling in the past, Nansen CEO Alex Svanevik remarked in June, “we can (but rarely) make mistakes — no-one is perfect.”



Blockworks contacted Nansen to gauge the reliability of the labeling in this case and learned this was one of those times. According to a Nansen spokesperson:



<blockquote class="wp-block-quote">&#8220;This wallet was labelled Three Arrows Capital (3AC) due to it receiving large amounts of crypto from another known 3AC wallet. After investigating further, we’ve confirmed it was a 3AC counterparty managing this wallet: Matrixport. We’ve updated the label to reflect this.&#8221;</blockquote>



Matrixport is a financial services platform for cryptoassets that includes trading, borrowing and lending, and staking products.



The purpose behind Tuesday’s withdrawals isn’t clear, but <a href="https://www.matrixport.com/about" target="_blank" rel="noreferrer noopener">the company</a> did confirm the wallet is theirs.



<blockquote class="wp-block-quote">&#8220;The Matrixport wallet activity is part of our routine operations and not related to 3AC,&#8221; Ross Gan, head of public relations told Blockworks.</blockquote>



One reason behind the move may be that stETH holders will be unable to redeem their tokens for ether until <a href="https://twitter.com/lidofinance/status/1536756940419784704?lang=en" target="_blank" rel="noreferrer noopener">at least six months</a> after the Merge, which is slated for <a href="https://cms.blockworks.co/ethereum-merge-countdown-at-t-20-days/" target="_blank" rel="noreferrer noopener">Sept. 15</a>.



A Twitter speculator <a href="https://twitter.com/jadid/status/1567163416795844616" target="_blank" rel="noreferrer noopener">suggested</a> that the withdrawal move shows big wallet holders plan to liquidate their ether in the period of heightened focus on Ethereum around the Merge. Crypto markets are broadly down, but ether has shown strength relative to bitcoin, remaining in a daily uptrend since Aug. 29.



3AC owed 27 crypto companies <a href="https://cms.blockworks.co/3ac-co-founders-used-funds-assets-for-50m-yacht-bungalows/" target="_blank" rel="noreferrer noopener">$3.5 billion</a> at the time of its bankruptcy, with its biggest creditor being crypto brokerage Genesis. Founders Su Zhu and Kyle Davies have mostly laid low in the months following their fund’s collapse, allegedly refusing to cooperate with the <a href="https://cms.blockworks.co/three-arrows-capital-ordered-into-liquidation-by-bvi-court-report/" target="_blank" rel="noreferrer noopener">court-appointed liquidator</a> Teneo that’s overseeing its liquidation.&nbsp;



Blockworks had reached out to restructuring firm Teneo, who declined to comment on the alleged withdrawals, saying that the restructuring firm is focused on advancing the liquidation process “in order to maximize asset recoveries on behalf of all creditors.”



“During this time, it would be inappropriate to comment on speculation surrounding transactions that may or may not relate to Three Arrows or the investigations that are underway,” a spokesperson told Blockworks.



3AC didn’t return a request for comment by press time.



This story was updated on Sept. 7 at 9:15 am ET with new information about the funds&#8217; origin, and on Sept. 8 at 3:12 am ET with comment from Matrixport.



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Withdrawal of $45M from Curve Finance, Convex, Was Not From 3AC, Nansen Says

<div id="highlights-block_6291134ae2622" class="highlights">
 <ul>
 <li>The startup is run by the latest Wall Streeter to find success personally investing in crypto, before giving their own fund a shot</li>
 <li>The firm plans to kick off its fundraising efforts at a crypto conference in Miami next week </li>
 </ul>
 
</div>



A veteran stock-picker is the latest traditional financier to give crypto a try. 



Duncan Simmons, who previously spent time at equity-focused Wall Street stalwarts Coatue Management and Iridian Asset Management, is entering capital-raising mode for his Aqxa Research, the founder and CEO told Blockworks exclusively.



Simmons’ first stop: the iConnections <a href="https://iconnections.io/" target="_blank" rel="noreferrer noopener">Digital Assets Forum</a> in Miami next week, where institutional investors angling for crypto exposures will mingle with up-and-coming managers. The plan is to commence trading the new vehicle sometime this summer.



<div class="wp-block-image"><figure class="alignright size-medium"><img decoding="async" loading="lazy" width="300" height="260" src="https://blockworks-co.imgix.net/wp-content/uploads/2022/05/Headshot2-IMG_8418-300x260.jpg" alt="Aqxa Duncan Simmons" class="wp-image-22123" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2022/05/Headshot2-IMG_8418-300x260.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2022/05/Headshot2-IMG_8418-300x260.jpg?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2022/05/Headshot2-IMG_8418-300x260.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2022/05/Headshot2-IMG_8418-300x260.jpg?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2022/05/Headshot2-IMG_8418-300x260.jpg?w=2048 2048w, https://blockworks-co.imgix.net/wp-content/uploads/2022/05/Headshot2-IMG_8418-300x260.jpg?w=297 297w, https://blockworks-co.imgix.net/wp-content/uploads/2022/05/Headshot2-IMG_8418-300x260.jpg?w=301 301w, https://blockworks-co.imgix.net/wp-content/uploads/2022/05/Headshot2-IMG_8418-300x260.jpg?w=253 253w, https://blockworks-co.imgix.net/wp-content/uploads/2022/05/Headshot2-IMG_8418-300x260.jpg?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2022/05/Headshot2-IMG_8418-300x260.jpg?w=50 50w" sizes="(max-width: 300px) 100vw, 300px" /><figcaption>Aqxa&#8217;s Duncan Simmons | Source: Aqxa</figcaption></figure></div>



While Simmons’ fundraising aspirations are unknown, he’s already assembled a staff of five professionals with crypto experience — likely a bellwether of a substantial amount of day-one capital. The portfolio manager is in the process of finalizing service providers; he’s selected Goldman Sachs vet <a href="https://cms.blockworks.co/meraki-global-advisors-an-early-entrant-to-crypto/" target="_blank" rel="noreferrer noopener">Ben Arnold’s Meraki Global Advisors</a> to handle outsourced crypto trading.



<a href="https://www.aqxa.io" target="_blank" rel="noreferrer noopener">Aqxa</a> is fine-tuning a research-intensive approach to probing digital asset markets for alpha. 



The approach involves a two-tiered org chart consisting of analysts — who establish macro themes and “what the question is” — as well as so-called “community researchers,” initially a global network of contractors tasked with conducting research on the likes of Discord, Telegram, Twitter and, of course, by learning the nooks and crannies of the protocols themselves.&nbsp;



The firm also plans to invest in early-stage tokens and is testing an on-chain analysis procedure that taps quantitative algorithms to determine asset weighting, based on volatility, trading volumes and related factors. Analysts with quant experience are tasked with rating either long or short bets on a one to five conviction scale, which feeds into how much of Aqxa’s overall book each position accounts for.



Higher-conviction, more surefire wagers, however, may be downgraded below more dubious prospects, depending on market conditions.&nbsp;



Pulling the trigger on investments is done manually — not using algorithms — via Simmons’ bread and butter: discretionary, fundamental trades.&nbsp;



Those investments, primarily, are made up of long and short plays in some of the most liquid cryptocurrencies — as well as dabbling in decentralized finance (DeFi). Simmons is also considering adding private venture capital- or private equity-style opportunities to the vehicle’s investment mix down the line.&nbsp;



Simmons, who started investing personally in bitcoin in 2017, “floated the idea” of starting up a crypto trading business at a previous firm, but compliance and other back-office functions, as well as risk controls and tolerance, nixed the venture before it got off the ground.&nbsp;



“I’m adopting the value-add research model that I was trained on,” he said. “It takes using deep, fundamental research, [as well as] engaging with management teams, developers, users and other stakeholders — actually using products ourselves, as well as doing the strategic analysis of how various projects fit into the ecosystem.”



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crypto hedge fund