Deals
Bitcoin

Digital Currency Company Secures VC Backing

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In a sign of growing investor interest in “bankless” financial markets, a “Bitcoin” company has secured the first known venture capital investment of over one million dollars. New York-based BitInstant recently exchanged some of the founders’ equity ownership with a top VC firm for $1.1 million. The investment has not been announced yet but people involved in the transaction said the funds will be used as working capital to support BitInstant’s bitcoin-to-cash conversion business. The money is also needed to help get through challenging start-up costs for the Bitcoin Mastercard that BitInstant is trying to bring to market next year. BitInstant was co-founded by Charlie Shrem, a former hacker, and Gareth Nelson, an autistic computer programmer, who attracted the interest of angel investor Roger Ver.

Legal
Yorkville Advisors

SEC Accuses Yorkville of Earning Millions From Inflated Fund Values

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Two New Jersey-based hedge fund managers who ran a billion dollar PIPE fund were sued for investor fraud by the Securities and Exchange Commission today. Mark Angelo, 40, and his CFO Edward Schinik, 46, of Yorkville Advisers were pioneers in the PIPE investing space funding small and micro cap companies through convertible debt with warrants to buy stock at a discount. From 2001 through 2008 their funds never showed a negative performance period. But at the end of 2010 investors were suddenly surprised when Yorkville told them the funds' value had dropped 33 percent. The SEC’s complaint alleges Yorkville began inflating the value of its investments during the start of the 2008 financial crisis to earn at least $10 million in fees and entice an additional $280 million from investors. Angelo, Yorkville’s founder, earned a 20 percent fee off the funds’ performance.

Legal
NIR Group

JP Morgan Reporting Snafu Shows Ribotsky Still Acting as NIR Group Valuation Manager

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Investors in N.I.R. Group funds received fund valuation reports in late August prepared by the ousted manager Corey Ribotsky that were sharply at odds with reports sent to them from the funds' court-appointed receiver, PricewaterhouseCoopers (PwC), just days before, according to reports and documents obtained by Growth Capitalist. Ribotsky's valuation report was distributed by JP Morgan Clearing, the custodian for N.I.R.'s limited partner IRA accounts. Morgan told NIR's domestic fund investors that Ribotsky sent it a year-end valuation report, dated January 18, 2012, in late August. This report showed only a 30% loss for 2011 compared to the 97% loss investors had received just days before in their Schedule K-1 statements prepared by PwC's Cayman office. The SEC's investor fraud suit against Ribotsky and his removal as manager of the AJW Funds was widely reported earlier this year so it's odd that JP Morgan Clearing was still accepting valuation reports from Ribotsky.