(Bloomberg) -- Hivemind Capital Partners, a digital-asset investment firm founded by former Citigroup Inc. executive Matt Zhang, is launching a $300 million fund to invest in crypto tokens, even as a US regulatory crackdown has dampened investor sentiment on the sector.
Liquid Opportunity Fund, an open-ended investment vehicle, has secured about $60 million from institutional investors and aims to reach the targeted size by late next year, Zhang, the firm’s managing partner, said in an interview. The fund will focus on large liquid tokens.
“We are doubling down in the space, while other people are taking off,” Zhang said.
The US crypto market has been pressured as platforms including Binance and Coinbase Global Inc. face lawsuits or warnings from regulators. Still, Zhang said this is potentially “a good entry point” to invest in liquid, publicly traded tokens, which he believes will recover sooner than private venture deals.
Read More: Citigroup Alum Matt Zhang Launches $1.5 Billion Crypto Venture
On Monday, the US Securities and Exchange Commission accused Binance Holdings Ltd. of mishandling customer funds, misleading investors and regulators, and breaking securities rules. Binance called the complaint “disappointing,” saying “we intend to defend our platform vigorously.”
The SEC’s suit against Binance “does not impact Hivemind’s new fund launch at all,” Zhang said in an email. “If anything, this reinforces our viewpoint that the digital-asset space is still early in its formation as an investable asset class.”
While institutions from pensions, endowments, and funds of funds have “paused” on crypto, investors in Asia, such as family offices, are focused on the sector and make up the bulk of the fund’s new investors, he said.
Zhang launched the New York-based investment firm in late 2021, amid the peak of the crypto bull market. Lee Smallwood, Citigroup’s former chief operating officer for markets in North America, joined Hivemind last year. Zhang declined to share the performance figures for the firm’s initial $1.5 billion fund, which invested in both venture deals and liquid tokens.
“We saw a lot of black-swan events — Celsius, Luna, Three Arrows, FTX, Alameda,” he said. “One thing I can tell you is we are not affected by any of this.”
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