Investors continue to support Bitcoin despite Mt. Gox failure and losses

By Nicel Jane Avellana

Mar 19, 2014 09:07 AM EDT

The events that led to the failure of Mt. Gox apparently did not scare investors away from Bitcoin. Instead, investors like Benchmark Capital and Fortress Investment Group invested in Xapo, a startup that aims to secure Bitcoins. Others also formed fresh proprietary exchanges that allow institutional investors to trade the digital currency, TechCrunch reported.

According to a Pensions & Investments report, Fortress lost $3.7 million of its $20 million investments in Bitcoin last year based on a regulatory filing with the Securities and Exchange Commission. However, this has apparently not deterred the company from the digital currency.

Commenting on the recent investment Fortress made in Xapo, Meyer "Micky" Malka told TechCrunch, "They believe in the protocol more than any [Wall Street] firm."

Other investors are also standing behind Bitcoin. Andreessen Horowitz , Union Square Ventures and Ribbit Capital also invested in the $25 million Series B round of Coinbase. Pantera Capital was also an investor in the $10 million venture round of Bitstamp. Other investors have also supported other Bitcoin-related startups, TechCrunch reported.

Perseus Telecom and Atlas, for their end, launched a joint venture last week that would form secure exchanges for the crypto-currency in areas like Frankfurt, Hong Kong, Singapore and New York. The report quoted Atlas Co-Founder Shawn Sloves as saying, "We're giving [institutions] the ability to build private markets that manage their wallets for bitcoin and they can have their own exchange where they have buyers and sellers come in."

Aside from Bitcoin, the joint venture will also make these private exchanges available for whitecoin and dogecoin. According to Sloves, they intend to "support global Bitcoin trading and get it up as rapidly as possible."

Not all investors hold an optimistic view about the exchanges as a possible investment, however. The report quoted the unnamed investor as saying, "The question of who will win in the race to establish the dominant exchange is wide open at this point. There generally aren't many, or even several, exchanges in a typical market ... it's got a 'winner take all' dynamic to it." 

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