Short Altcoin Trading Fund Ltd. (SATF) is a new altcoin ETF (exchange traded fund) and is right now announcing the pre-launch of our new altcoin investment product.
PRE-IPO ANNOUNCEMENT
This post forms the initial announcement of our IPO and solicitation of investments. Please note this is a pre-IPO announcement and does not constitute an offer of investment. However, at this time investors are offered the opportunity to read more and formulate suitable questions for the fund managers. Our IPO will be forthcoming in the next 3 months as of today (30 January 2016), and we will make a new thread when our IPO launches.
BACKGROUND
The opportunity stems from an observation over the past 12 months that the number of altcoin clones of bitcoin has increased dramatically beyond the natural level.
THE OPPORTUNITY
At the current count there are over 650 different altcoins in the bitcoin ecosystem listed at CoinMarketCap (1)
The founders believe that all of these coins with the exception of the top 10 are worth something very close to $0 since they are all clones of the BTC codebase just rebranded with a different name.
Right now there is over $100m+ allocated to these different coins and we are in an alt coin bubble. We believe that this amount will eventually go closer to $0 and that we can make a profit from this expected movement by shorting these coins now.
By pooling the capital from multiple investors into a single fund we can obtain better terms on shorting these coins with the exchanges, reduce risk and take advantage of economies of scale.
The lead trader of the fund has been involved in bitcoin trading since 2011 and has conducted over $1m in bitcoin trades on MtGox, Bitstamp, Bitfinex, Huobi (CNY), Bitcoin Central and Local Bitcoins.
(1)
http://coinmarketcap.com/all/views/all/MECHANISM OF OPERATION
The fund will sell short investments in coins listed on (1) from positions 10 (Emercoin) - 100 (CannabisCoin). The short sale will form the initiation of an Initial Position (IP) in the Coin of Interest (CI). Subsequent short sales will be referred to as Maintenance Positions (MP).
The Ideal Size (IS) is the size of each individual position within the Fund Portfolio (FP). The IS will be set initially at a maximum of the following: 10% of underlying Market Cap (MC) or $50,000 - which ever is smaller.
The date of the IP taken in each CI will not be disclosed here but will be within 6 weeks after the IPO.
A broker will facilitate the IP. Existing holdings will be borrowed from existing investors and immediately sold in the market following the IPO. Each IP size will be maintained at the IS and adjusted on a monthly basis in line with movements in the underlying. The adjustment will be made if necessary through initiation of an MP. The IP, along with any composite MPs, makes up a total position at any point in time in an underlying, referred to as a Composite Position (CMP).
A CMP will be held until the underlying MC arrives at less than $10,000 at which point the CMP will be closed by purchasing the underlying in the market and returning the borrowed investment to the original holders. A profit is then realized which will be distributed to the fund investors as a dividend every 3 months.
The above text, whilst short, concludes the mechanism of operation (MO) of the fund. Further information will be added to this announcement as comments accrue.
The following pre-text announces the legal structure, jurisdiction and tax arrangements of the fund and is subject to change between today (30 January 2016) and the launch date of the IPO.
LEGAL STRUCTURE
SATF is an interval fund. The fund will sell a fixed number of shares in the initial public offering (IPO). The shares will then trade in the secondary market (To Be Specified by us) at a price that may be greater or less than the fund’s net asset value. As closed-end fund shares are generally not redeemable, investors wishing to exit from their investment must generally rely on the secondary market to sell their shares.
As an interval fund, the SATF is permitted to offer shares continuously at a price based on the fund’s net asset value and periodically offers to repurchase its shares from shareholders. Such repurchase offers will generally be made every three, six or twelve months. The purchase price is based on the fund’s net asset value per share as of the date specified in the repurchase offer (generally, no more than 14 days after the date on which shareholders must submit their acceptance of the repurchase offer).
LEGAL JURISDICTION
SATF is a Registered investment company. Registered investment companies are registered under the 1940 Act and subject to significant disclosure and ongoing compliance obligations. As registered investment company securities are also registered under the 1933 Act, they may be offered to the public
TAX ARRANGEMENTS
SATF is based in the Isle of Man, a recognised jurisdiction that sits independent of EU and UK tax laws. The Isle of Man has ‘full’ double tax treaties with the UK, Estonia, Bahrain and Malta, and a number of limited tax treaties with a number of other jurisdictions. SATF is a Registered investment company and has a permanent establishment (PE) on the Isle of Man, and profits attributable to that PE are taxable on the Isle of Man.
This concludes the pre-announcement of our IPO. Please add your questions below which we will be pleased to answer.
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