Bitcoin News from Tron Founder – The Cryptonomist

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Tron founder Justin Sun was apparently the top-secret client of crypto-asset manager Valkyrie. In fact, a private financial document reviewed by CoinDesk shows that Sun, one of the most influential figures in cryptocurrency, was responsible for the vast majority of assets under management in a key Valkyrie division.

This means that a good part of the Tron founder’s Bitcoin (BTC) holdings are stored in the American company Valkyrie Investments. According to CoinDesk, the altcoin boss had over $580 million in BTC stashed away at the crypto asset manager at some point in August. This represented more than 90% of the money of Valkyrie’s largest division, Valkyrie Digital Assets LLC, the document states.

Is Tron Founder Helping Crypto Centralization?

What is being reported simply means that Valkyrie Investments, a fund manager that offers crypto products to Wall Street investors, has relied primarily on Justin Sun, the founder of Tron as well as a controversial Chinese crypto billionaire.

Apparently, the current state of Valkyrie’s resources is unknown, and Sun also claimed to be one of Valkyrie’s major shareholders. This is just another example of cryptocurrency centralization, an industry full of whales wielding disproportionate influence despite its decentralized ideals.

However, Sun’s relationship with Valkyrie emerged in a way that benefited her empire. For example, Valkyrie has created investment products for “Justin tokens” such as TRX from Tron and BTT from BitTorrent that other crypto asset managers claim to avoid.

Also, he promoted Tron using marketing materials from blockchain network developers. It even allowed Tron to share its spotlight on Wall Street, literally, with someone wearing a Tron logo T-shirt joining the Valkyrie bell ringing on the Nasdaq in September.

Net of the fact that the financial lives of individuals are almost always nobody’s business, Sun’s disproportionately undisclosed percentage of Valkyrie’s assets under management (AUM) is an exception.

Indeed, the depth of the relationship between the two is a matter of public interest as it raises questions about Valkyrie’s reliance on a single client for growth.

Sun is a notable and polarizing figure in the cryptocurrency industry. He is the founder of the Tron blockchain, which has generated repeated controversy.

For example, Tron released an algorithmic stablecoin that researchers derided as a “clone” of the doomed UST/LUNA layout. Steve McClurg, chief investment officer of Valkyrie Investments, was unwilling to discuss the source of funds for Valkyrie clients, citing confidentiality. Sun did not respond to a request for comment.

Tron Tokens Cement Valkyrie’s $37 Million TRX Trust

Based on reports, it appears that Sun’s money has hit all sections of the business, from separately managed accounts to trusts and even Valkyrie’s bitcoin futures exchange-traded fund (ETF).

Having significant assets under management (AUM) can help a fund manager promote themselves to potential clients and even potential lenders. Plus, bigger is usually better too.

For a few months this year, Valkyrie had another whale, or major investor, sign a $700 million partnership to manage the NEM/Symbol crypto protocol treasury funds in January.

Weeks later, the company said its AUM had surpassed $1 billion, according to a February press release. However, that deal fell apart within months and NEM/Symbol took over its tokens, according to sources inside the protocol.

Additionally, McClurg told CoinDesk that Valkyrie continues to work with NEM/Symbol and the protocol does not appear on Valkyrie’s private document that CoinDesk reviewed.

In any case, Sun’s Tron blockchain tokens anchored Valkyrie’s TRX trust, its largest trust at $37 million, according to people familiar with the matter.

Justin Sun and SMA: why did he deposit his Bitcoin there?

In October 2021, Justin Sun described himself as the largest investor in Valkyrie’s Bitcoin futures exchange-traded fund (ETF). It’s unclear why Sun, a veteran cryptocurrency founder who recently told CoinDesk that he independently stores most of his tokens (and also has custodial partnerships with Binance, Huobi, and Fireblocks), would put so much of Bitcoin in an expensive SMA.

SMAs are portfolio management products that Valkyrie sells to investors who want to directly own their cryptocurrencies, but leave the buying and selling to a fund manager.

Valkyrie also charged a 1.5% fee when it officially launched its SMA service in October. John Key, Valkyrie’s former SMA product manager, said Sun’s SMA was an institutional-like product that differed from retail offerings.

Having a whale in an SMA does not necessarily pose a threat to customers with money in other products. However, this could become problematic for the asset manager’s income from commissions and its ability to pay staff, should that client decide to leave.

Chris McHugh, professor of economics at Tufts University, said of this:

“If you had a hedge fund with six out of seven coins in a player’s hands, you couldn’t change the budget, if you know what I mean.”

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