(Bloomberg) --
Most Read from Bloomberg
-
The World’s Rich and Powerful Are Stashing $500 Billion in This Tax Haven
-
What the Front Line of the U.S. Abortion Fight in Kentucky Looks Like Now
Arthur Cheong, who worked in oil trading before reinventing himself as a crypto fund manager, put money into a blockchain-based game called Axie Infinity last year.
The so-called play-to-earn game, where users can earn digital currency by taking part, was raising $864,000 through a private sale of its tokens. They cost 8 cents each at the time. They were worth about $124 as of Friday in Asia, according to CoinMarketCap.com, which translates into a gain of more than 150,000%.
Cheong said his fund invested more than $100,000, and declined to comment on how difficult it would be to exit. It’s an example of the kind of returns that are possible in his new area.
“We were actually one of the first few investors that saw the potential” in Axie Infinity, Cheong, 29, said in a video interview. Seeing “how fast it has grown definitely surprises us.”
Read More: Axie Infinity turns pandemic jobless into crypto traders
But this is still early days in an uncharted and unregulated territory, one that’s exposed to many risks that could lead to big losses on investments. The returns are also far from the norm: The Bloomberg Galaxy Crypto Index was up about 185% this year as of Friday in Asia.
Cheong made the investment through his Singapore-based cryptoasset fund DeFiance Capital, which he set up last year after working in the trading department of the oil giant BP Plc. He says China’s crypto crackdown may actually help the decentralized finance that his fund invests in.
DeFiance Capital oversees money for wealthy individuals, according to Cheong. Other major investors are Cheong himself and Three Arrows Capital, the crypto investment firm started by former traders at Credit Suisse Group AG. Cheong declined to give DeFiance’s assets under management, but said it was a nine-digit number. He also declined to give details on the fund’s returns.
Like many in the crypto realm, Cheong is evangelical about its future. The fund invests in “DeFi eating traditional finance,” DeFiance Capital says on its website.
In DeFi, or decentralized finance, people can lend, borrow, invest and perform other financial functions on apps that use blockchain technology, cutting out the middle men like banks and brokers needed in conventional finance.
DeFi is more responsive to users’ needs and can innovate at a much faster pace than conventional finance, according to Cheong. But it’s also subject to political, regulatory and infrastructural risks.