PayPal co-founder Peter Thiel, through his San Francisco-based venture capital vehicle Founders Fund, is backing a startup that aims to endear cryptocurrencies to large investors by applying Wall Street electronic trading know-how to the digital currency space, unidentified sources have told the Wall Street Journal.
Thiel, who owns stakes in Facebook and Airbnb, does not appear to be directly involved with Tagomi Systems, as the early-stage startup is currently called. However, a March regulatory filing lists Founders Fund partner Napoleon Ta as one of Tagomi’s directors.
According to the sources, Tagomi plans to create trading tools the address the challenge of connecting all the various cryptocurrency exchanges across the globe. At present, each requires a separate account and typically imposes limitations on the funds that can be traded on any given day. This creates liquidity issues and makes it difficult to execute large trades, which has prevented wealthy investors from embracing digital currencies.
Taking its cue from traditional stock markets, Tagomi will develop smart order routers similar to those used by equities broker-dealers and apply them to the online virtual currency exchange market.
So far, there is little information about startup apart from the fact that its founder is former Goldman Sachs executive Greg Tusar, who used to be in charge of the investment bank’s electronic trading division.
Tagomi has reportedly raised $15.5 million to date, but it remains unknown how much Thiel’s group has contributed.
Thiel has significant Bitcoin investment
Thiel had significant holdings of Bitcoins and did not hide his enthusiasm for the original cryptocurrency in an interview last year.
He was quoted as saying:
“If Bitcoin ends up being the cyber equivalent of gold it has a great potential left,” he said, “Bitcoin is mineable like gold, it’s hard to mine, it’s actually harder to mine than gold. And so in that sense, it's more constrained.”
His company also has investments in cryptocurrency-focused hedge funds Polychain Capital and Metastable Capital.