Hong Kong-based crypto hedge fund targets top billionaires: distributing HKD 70 million during market crashes, with Li Lin also involved.

23-07-04 20:28

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Original Title: " 700 Million Hong Kong Dollars in Dividends During Market Crash, Hong Kong's First Compliant Crypto Hedge Fund Targets the Wealthy

Original author: Tencent News "Qian Wang", Luo Fei

After a few months of turmoil in the cryptocurrency industry, Hong Kong has finally quieted down. When Tencent News' "Qian Wang" met with Ye Yizhou in late June at his office in the heart of Central, Hong Kong, he said he preferred the current state of Hong Kong. The previous state felt unreal and chaotic to him.

Ye Yizhou has been involved in cryptocurrency trading for more than 6 years and is the head of Frontier Wealth Management Co., Ltd. The fund is currently the only compliant cryptocurrency hedge fund in Hong Kong and has the best performance among the 11 funds that have obtained virtual currency trading licenses in Hong Kong.

According to Tencent News' "Qian Wang", Ye Yizhou's fund is the only company among these 11 funds that outperformed the market. Public information shows that Ye Yizhou's team ranked third in the cryptocurrency fund net profit ranking selected by Barclays in 2022, with a net profit rate of 9.2% - the industry generally approached a 50% loss.

By the end of 2022, the fund where Ye Yizhou works distributed approximately HKD 70 million in dividends to its limited partners (LPs).

Ye Yizhou told Tencent News "Qian Wang" that during the busiest week in the Hong Kong cryptocurrency circle in April of this year, he received more than 50 people who came to Hong Kong to "seek opportunities in the cryptocurrency circle". These people came from the United States, the United Kingdom, mainland China, as well as Singapore, Dubai and other places, hoping that Hong Kong could become a harbor for them to stay as "digital nomads".

These people believe that 2022 is the most difficult year for the cryptocurrency industry. Ye Yizhou and his team may consider making money under Hong Kong's regulation, which is worth a try. In 2022, the stablecoin Luna, which is a leader in the industry, collapsed in May, and the top three exchanges, including FTX, collapsed in November. Subsequently, Bitcoin plummeted from nearly $40,000 in early May to $16,000.

However, Ye Yizhou believes that Hong Kong is not suitable for all people in the cryptocurrency industry, and even some who want to enter the industry from traditional finance. It is only more suitable for intelligent traditional finance professionals.

Unlike most cryptocurrency traders who come from grassroots backgrounds, Ye Yizhou is a "regular army" trader who came from Wall Street. He graduated from the Columbia Business School in the United States and joined the well-known hedge fund company Fore Research & Management on Wall Street after graduation, where he worked for many years in convertible bond arbitrage trading.

In 2014, Ye Yizhou chose to return to Hong Kong and joined a local stock hedge fund company. During this time, due to personal interest, he started investing in Bitcoin very early on. He told Tencent News "Qian Wang" that at that time, there was no clear regulation on Bitcoin trading in the market, and he and his friends began to enter the large-scale Bitcoin secondary market trading in 2017. Later, he left the institution to start a business and established YOUCAPITAL Limited in Hong Kong.

Ye Yizhou said that the trading strategies of traditional financial market assets are mostly based on fundamentals, quantification, and event-driven factors. These strategies can be directly applied to cryptocurrency trading. Relatively speaking, cryptocurrency trading is easier because most participants in the cryptocurrency market are "novices" without professional financial and trading skills. When experts from traditional finance enter the cryptocurrency market, they become opponents of these novices in the market. Currently, the ratio of professional investors to retail investors in global traditional financial market exchanges, except for A-shares, is about 8:2.

Ye Yizhou refers to it as the "cognitive spread" in the cryptocurrency industry. In the 24-hour tradable cryptocurrency world, global traders trade the same underlying asset at the same time, but their behaviors and trading logic are very different. This also provides many opportunities for professional traders to make money, which is less common in traditional finance.

Unlike most veterans in the cryptocurrency industry, Ye Yizhou was among the first group of people in Hong Kong to apply for a cryptocurrency fund license, which he obtained in early 2022. His company also became the first investment institution to allow multi-strategy cryptocurrency trading and investment in Hong Kong in early 2023, known as a hedge fund.

Ye Yizhou told Tencent News "Qian Wang" that in addition to reviewing the ability of fund managers, regulators will also carefully investigate risk issues in multi-strategy funds, how to better protect the interests of investors, and the good trading records and behaviors of the funds themselves.

Tencent News "Qian Wang" learned that more funds in the Hong Kong market are not choosing compliant routes and are not in a hurry to apply for licenses from regulators. These people are using their own money or their friends' money to trade and are not currently raising external funds, equivalent to individual investors.

Among the approved funds in Hong Kong, only Frontier Investment Management has a complete trading record from the beginning of the 2022 fiscal year to the present.

Ye Yizhou told Tencent News "Qian Wang" that as a traditional finance practitioner, he and his team have been firmly committed to the "regulated" route since the first day of establishment.

This is because Ye Yizhou hopes that his fund can be targeted at more institutional investors. Tencent News' "Qian Wang" learned that the current source of funds for Frontline Fund, in addition to Ye Yizhou himself, also includes some high net worth clients, such as Li Lin, the founder of the cryptocurrency exchange Huobi Group.

Ye Yizhou and his team have also been in contact with some old money families in Hong Kong, and even some top private banks, hoping to find suitable product channels. Ye Yizhou told Tencent News "Qian Wang" that the current fundraising pressure is not great, and he is more inclined to launch fund products on institutions or family office platforms to attract the wealthy.

This may be related to Ye Yizhou's traditional financial background. In addition to being biased towards regulation, he prefers to deal with institutions. In his words, this is "batch" shelving of products that can cover a sufficient number of wealthy individuals with demand.

According to Tencent News' "Qian Wang", these top private banks do cover almost all of the wealthy resources in Hong Kong and mainland China. However, they have very strict requirements for the fund products they put on the shelves, such as compliance, transaction records, and reliable trading strategies. Among them, transaction records generally require 3 years. In the current situation in Hong Kong, the longest transaction record is only 1 and a half years. Ye Yizhou's fund is no exception.

If you want to enter the product framework of private banking strictly according to the process, Ye Yizhou and his colleagues need to wait patiently for a year and a half. However, according to Tencent News "Qian Wang", some Chinese financial institutions are also actively promoting the progress of the listing of cryptocurrency funds.

A wealthy person in Hong Kong has told Tencent News' "Qian Wang" that they are indeed interested in fund products for regulated cryptocurrencies and hope to allocate assets through institutions. Over the past few years, during the brutal growth of the cryptocurrency market, these wealthy individuals have more or less participated in cryptocurrency investments, all of which have lost money without exception.