The Winklevoss risk factor in new Bitcoin Trust

Summary:A public listing for the Winklevoss Bitcoin Trust could raise more than $20 million...

Simone Foxman at Quartz reports that Cameron and Tyler Winklevoss, the millionaire twins from the Facebook founders' saga, have filed SEC papers for a public offering of shares in Winkelvoss Bitcoin Trust

The venture will allow retail investors to invest in Bitcoins by trading shares in the Trust. This is similar to a gold fund and lets investors own fractions of "Digital Math Based Assets such as Bitcoins." This will likely increase volatility in the value of Bitcoins because speculators can play the market without needing to buy and sell them directly.

The Winklevoss twins have accumulated a large number of Bitcoins so this could allow them to earn money on a substantial amount of locked-up capital via the Trust's monthly fees and  transaction services.

The risk factors in the SEC filing includes warnings that a malicious botnet on the Bitcoin Network could stop the Trust operating; or the Trust could lose its encryption keys.

There's an astounding 18 pages of risk factors. However, I did not see listed the most obvious risk factor of them all:  the Winklevoss name.  The twins are rich, good-looking, and Facebook famous, which attracts a lot of mean-spirited trolls. Hacker groups will relish an opportunity to school these Harvard grads. 

Bitcoin exchanges have been attacked by hackers and the largest knocked offline and out of business.

Clearly, the Trust must be highly-confident that it has rock-solid security to use the Winklevoss name so prominently, and not include it as a risk factor. 

Topics: Banking


In May 2004, Tom Foremski became the first journalist to leave a major newspaper, the Financial Times, to become a full-time journalist blogger. He writes the popular news blog Silicon Valley Watcher--reporting on the business of Silicon Valley. Tom arrived in San Francisco in 1984, and has covered US technology markets for leading comput... Full Bio

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