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Bitcoin hedge fund launches with Silicon Valley and Wall St. support

March 19, 2014, 7:00 AM UTC

FORTUNE — Last December, I wrote that Fortress Investment Group was preparing to launch a fund that would buy and hold Bitcoin. I also wrote that while details were scarce,” there was “some relationship to a new Bitcoin-related fund raised by Pantera Capital, a San Francisco-based hedge fund whose clients are known to include several Fortress executives.”

Here is what I now know: Fortress has invested directly in Pantera Bitcoin Partners, the limited liability company overseeing Pantera’s Bitcoin fund. Moreover, all future purchases of Bitcoin or other crytpocurrencies by Fortress and its principals will be made via Pantera. In other words, there will not be a Fortress-branded fund. It remains unclear if my initial report was accurate and things changed, or if I was off track from the beginning.

One of the bread crumbs I apparently misread involved Steve Waterhouse, whose LinkedIn profile at the time listed him as both a managing director with Fortress and partner on an unnamed Bitcoin fund. Waterhouse has now formally left Fortress, to become a partner with Pantera.

In addition to Fortress, Pantera has received investments from venture capital firms Benchmark and Ribbit Captial. Those three firms also recently partnered to invest $20 million into Bitcoin “vault” company Xapo, which happens to hold Pantera Bitcoin Fund’s assets (Pantera also made a small co-investment on that deal, which had not been previously disclosed).

No word yet on how much any of the three funds have invested in Pantera, or how much Bitcoin they already have committed to the underlying hedge fund (which is open-ended). In fact, all we really know about the hedge fund is that it’s more focused on long-term appreciation than active “trading,” and that it had $147 million in gross asset value as of last December 4 (according to a regulatory filing). A source familiar with the fund said that at least some of the $147 million came from Fortress.

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“About a year ago I put all of my professional intentions into Bitcoin, and came across these three firms and saw that we had similar visions,” explains Pantera CEO Dan Morehead, who originally launched the firm to manage global macro hedge funds (something it no longer does for outside investors). “Now they are shareholders.”

Ribbit Capital founder Micky Malka adds that the involvement of Pantera and Fortress gives Bitcoin some Wall Street credibility, which could help the broader Bitcoin ecosystem. “For Bitcoin to become stored value, it needs to be trusted by hundreds of millions of people, not just hundreds of thousands of people. It’s still very high risk, but this is a step toward that goal.”

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