Heavy losses are rocking alternative crypto-asset funds at Pantera Capital, one of the oldest cryptocurrency investment managers, and providing stark contrast to its bitcoin (BTC) fund’s gains.

Pantera Capital’s flagship bitcoin fund – a fund holding BTC since 2013 and bitcoin cash (BCH) since 2017 – lost 75.6% in 2018 and gained 87.7% in 2019, according to internal materials seen by CoinDesk. The last two years dragged the bitcoin fund’s all-time returns to 10,162%, down 54% from 2017’s peak of 22,321% but still exceeding returns at elite funds hundreds of times over.

On the newer end, three hybrid Pantera Capital hedge funds created in 2017 were solidly negative, suggesting access to deals was not indicative of investment performance and that novel coin vehicles were highly risky or hard for the firm to actively manage. 

From inception to the end of 2019, a Pantera Capital digital asset fund that trades a hodgepodge of free-floating virtual currencies – like ether (ETH), XRP and zcash (ZEC) – lost 72.8%. An initial coin offering (ICO) fund, 42.2% under, lost roughly three times more than a long-term twin fund’s 14.5% decline. About $1 million to $5 million was allocated to each of Pantera’s nearly 40 ICO deals, the materials say.

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“A lot of the ICO assets are relatively young compared to bitcoin. And because of their relative youth, the expectation should be that it should take time for those assets to come into their own,” a Pantera Capital fund investor, speaking on the condition of anonymity, told CoinDesk.

The more exotic investments in the digital asset fund were ERC-20 tokens and contracts on Augur, a crypto-betting portal spawned by Pantera Capital co-chief investment officer Joey Krug. Dan Morehead, the first chief investment officer and formerly Tiger Management’s chief financial officer, founded Pantera Capital in 2013.

Pantera Capital did not respond to requests for comment. The cryptocurrency investment firm recorded $470 million in assets under management across seven non-venture and venture funds at the close of the 2019 fiscal year. The passive bitcoin fund had $110 million, the three hedge funds had $90 million and the three venture funds had $270 million.

Some $95 million was committed to the first two venture funds from 2013 to 2019. The third venture fund has been raising $175 million since 2018 to invest in cryptocurrency companies of all sizes. Notable venture investments include Bakkt, Bitstamp, ErisX and others. 

Pantera Capital’s track record underscores how market forces can shape a fund’s performance. 

The best year, 2017, propelled by a breakout run-up in cryptocurrency prices, delivered the bitcoin, digital asset and regular and long-term ICO funds returns of 1,565%, 145.6%, 347.6% and 6% gains, respectively. The worst year across the board – 2018, driven by a crypto-market comedown – cut 87.2% from the digital asset fund, 83.1% from the regular ICO fund and 9.6% from the long-term ICO fund.

The funds lost money again in 2019: 1.9% in the digital asset fund, 23.5% in the regular ICO fund and 9.6% in the long-term ICO fund. More time could turn the newer funds around, though, as strong gains in earlier years did to cushion the blow of 2014’s second-worst 58.1% loss for the bitcoin fund.

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At least $100,000 is required to invest in the four Pantera Capital funds, which reportedly have Benchmark Capital, Fortress Investment Group and Ribbit Capital on their roster of limited partners, and which permit withdrawals quarterly from the digital asset and ICO funds and daily from the bitcoin fund.

Regulatory barriers could be to blame as much as the market volatility inherent to cryptocurrencies. Some Pantera Capital ICO investments were arranged with Simple Agreements for Future Tokens (SAFTs), contractual arrangements that tend to shoehorn crypto-asset compliance into current securities laws. 

The appeasement is no guarantee in the United States, Pantera Capital’s home base, and may explain shortcomings with the ICO investment model: The U.S. Securities and Exchange Commission sidelined the SAFT framework in an injunction halting the Kik messenger’s $100 million offering of a Kin coin that was backed in part by Pantera Capital. 

“There is no question the ICO environment has been affected by regulatory pressure,” the Pantera Capital limited partner said.