(Bloomberg) -- Billionaire moneymen Peter Thiel, Alan Howard and Louis Bacon have seen plenty of big paydays—but probably none as unusual as this one.
A buyback by Block.one, a cryptocurrency startup, will return as much as 6,567% to its earliest investors—in less than three years. That translates into $6.6 million for a $100,000 stake, a stunning result any time but especially in a market that crashed in 2018.
“Block.one is very much the odd one out in the crypto market,” said Tom Shaughnessy, co-founder of Delphi Digital, a crypto research firm in New York.
Block.one stands out because of the scope of its ambitions and size of its balance sheet: it raised about $4 billion in the biggest sale of digital tokens. The promise is to help produce key buildings blocks for a new secure version of the internet. The company plans to announce a social-media product in June.
But with few outward signs of progress since the sale of EOS tokens, which was made over the course of a year and wrapped up in June 2018, investors and analysts have had an overriding question: what is 32-year-old Chief Executive Officer Brendan Blumer doing with the money?
“They designed a very clever mechanism to hoover up as much capital as possible”
In a March 19 e-mail to shareholders seen by Bloomberg, the company, which is registered in the Cayman Islands and operates mainly from Hong Kong, disclosed some of the answers: Its assets, including cash and investments, totaled $3 billion at the end of February.
Most of the company’s holdings, $2.2 billion, are in what the e-mail called liquid fiat assets, with the majority of that invested in U.S. government bonds.The e-mail said volatility had “adversely impacted” its cryptocurrency portfolio, halving it to about $500 million. The company held as many as 140,000 Bitcoins, making it one of the largest holders of the original cryptocurrency, according to people familiar with the matter. In an e-mail T...