Page 100 - Forbes - Asia (July - August 2018)

Investing

make them rich. They were lured by the chance Zhou’s tricks was to capitalize on the inherent
to rub elbows with the latest overnight success inefficiencies of the nascent market. He could
story in crypto, FBG Capital of Beijing. often buy bitcoin on one exchange at $300 and
To the crowd assembled, FBG’s fame stems sell it on another at, say, $301.50, pocketing a
from turning $20 million into $200 million riskless $1.50 per coin. To anyone with a fast
in a year. In fact, ten months before this soi- internet connection and a modicum of trading
ree, the group of traders behind the firm didn’t skill, it was easy money.
yet have a name for their company. Today it He soon joined a group of like-minded Chi-
counts Silicon Valley venture capital firm Se- nese traders who pooled their money, and by
quoia Capital among its blue-chip investors early 2017, they had amassed some $20 million.
and is one of the biggest crypto-asset managers That year, as the ICO frenzy began bubbling
in Asia. They have landed in America and are over, Zhou and his trading buddies were eager
seeking investors. buyers, sometimes investing on little more than
FBG’s approach has three pillars: Invest like a research paper and lofty prom ises. His group
a venture capitalist in initial coin offerings plowed millions into dozens of projects like
(ICOs), trade on news and events by moving Tron, Decentraland and MakerDAO.
in and out of tokens rapidly and, critically, ex- One former member of Zhou’s trading op-
ploit insider relationships and marketing hype eration, Gordon Chen, describes FBG’s un-
to ensure profitability. The firm’s rise speaks orthodox ICO investing approach: Look close-
ly at the founding team, monitor chat rooms
on Telegram and talk to academics, scientists,
The rm’s rise speaks volumes engineers, investors and community leaders.
about the anything-goes world of Chen adds that his ICO due diligence required
him to travel incessantly to meet with crypto
cryptocurrencies, where the stated ideals project teams. “I only slept three or four hours

of democratization are a joke and being a night this week,” Chen said in San Francisco
in March.
an insider is the surest path to riches. FBG’s amorphous investment process, where
hard numbers are nearly nonexistent, is typical
in cryptoland and has so far returned riches.
volumes about the anything-goes world of Its investment in OmiseGO, a crypto platform
cryptocurrencies, where the stated ideals of de- that claims it will provide financial services
mocratization are a joke and being an insider is to unbanked populations, leaped by 33 times
the surest path to riches. after FBG bought coins at $0.27 a pop in mid-
FBG founder Shuoji Zhou, 36, grew up in 2017. It bought tokens in Zilliqa, a platform
Yancheng, China, a regional city of 7 million in for speeding up financial transactions, at about
Jiang su Province, a few hours north of Shang- nine tenths of a cent per token. This year, Zil-
hai. He studied applied math at the University liqa has traded as high as 20 cents and now sells
of Electronic Science & Technology, a middle- for 6, a 567% return. Like other big investors in
tier school in central China, but he wasn’t there crypto, FBG is offered “presale” discounts on
for the coursework. “Friendship, I think, is the ICOs to the tune of 30%.
most important thing in college. I forgot all the “I view FBG as just one of the most talented
things I studied,” he tells Forbes from a hotel investor teams in this space,” says Olaf Carlson-
room in San Francisco. FBG, which stands for Wee, 29, a crypto wonder boy who graced the
Fintech Blockchain Group, has employees in July 27, 2017, cover of Forbes and is the founder
New York, Singapore, South Korea and China. of the largest crypto fund in the U.S., Polychain
Until recently its headquarters was a shared co- Capital, which has roughly $1 billion in assets
working space in Beijing. Its website is a single under management. FBG is known for spotting
page with its logo and an email address. promising crypto projects in Asia.
After college, Zhou worked in Beijing as an According to Zhou, trading makes up more
IT consultant for IBM and then Oracle, and in than half FBG’s revenue, but as the crypto trad-
2014, he committed $10,000 of his savings to ing environment has become more transpar-
trade bitcoin. The next year, he left Oracle to ent and efficient, the firm has moved from ar-
trade crypto full-time and increased his stash bitraging crypto exchange-price discrepancies
to nearly $100,000 during a period when the to event-driven trading, in which FBG bets
digital coin went from $270 to $430. One of on how topics like regulatory news will af-

98 | FORBES ASIA JULY / AUGUST 2018