Crypto Investment Firm BlockTower Capital Suffers Losses in Hack

(Bloomberg) — Crypto retail investors often fall victim to hacks and scams in the industry. Now a large investment firm is on the receiving end.

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BlockTower Capital’s main hedge fund has been taken over and partially emptied by fraudsters, according to people familiar with the matter who declined to be identified discussing sensitive information. The company has $1.7 billion in assets under management, according to data provider PitchBook.

One of the sources said the funds are still missing and the hacker has not been caught, but the firm has hired blockchain forensic analysts to determine how the money was stolen and recently notified its limited partners about the heist. BlockTower declined to comment on the hack when contacted by Bloomberg.

Cryptohackers continue to shake up the digital asset industry, with scammers stealing nearly $1.7 billion from projects last year, according to research firm TRM Labs.

Founded in 2017, BlockTower has offices in Miami and New York and has invested in companies including non-fungible token developer Dapper Labs, gaming studio Sky Mavis, and Terraform Labs, creator of the failed TerraUSD stablecoin. The firm has raised a $150 million venture fund in 2022.

The hack is not the first failure for BlockTower. Last year, the company shut down its “market neutral” crypto fund, which at one point oversaw more than $100 million, after investment opportunities for the strategy dried up.

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