Bankers Ditch Fat Salaries, Chase Digital Currency

Richard Liu gave up a seven-figure salary this month to get into one of the hottest financial instruments around right now: initial coin offerings. The former China renaissance deal-maker has since backed a clutch of crypto-coin sales that have raised millions—sometimes in seconds—often without a single product.

From Hong Kong and Beijing to London, accomplished financiers are abandoning lucrative careers to plunge into the murky world of ICOs, a way to amass quick money by selling digital tokens to investors sans banks or regulators. Cut out of the action, a growing cohort of banking professionals are instead applying their talents toward buying or hawking crypto currency, Bloomberg reported.

They’re going in with eyes wide open. For Liu, who put together some of China’s biggest tech deals in his old job, the chance to shape the nascent arena outweighs the dangers of a market crash or crackdown. Loosely akin to IPOs, ICOs have raised millions from investors hoping to get in early on the next bitcoin or ether, and their unchecked growth over the past year is such that they’ve drawn comparisons to the first ill-fated dot-com boom. Yet with stratospheric bonuses largely a thing of the past, the allure of an incandescent new arena far from financial red-tape has proven irresistible to some.

“Traditional investment banks and venture capitals need to monitor this space closely, it could become very big,” said the 30-year-old partner at $50 million hedge fund FBG Capital, which has backed about 20 ICOs. He’s off to a quick start, getting in on this year’s largest sale: Tezos, a smart contracts platform that raised $200 million to outstrip the average Hong Kong IPO size this year of around $31 million.

“Unlike the traditional financial sector, there are no ceilings or barriers. There’s so much to imagine,” he said.

Critics say many ICOs are built on little more than hyperactive imaginations. A cross between crowd funding and an initial public offering, they involve the sale of virtual coins mostly based on the ethereum blockchain, similar to the technology that underpins bitcoin. But unlike a traditional IPO in which buyers get shares, getting behind a startup’s ICO nets you virtual tokens—like mini-crypto currencies—unique to the issuing company or its network. That means they grow in value only if the startup’s business or network proves viable, attracting more people and boosting liquidity.