Former Citigroup executives seek US$100m for crypto hedge funds

[NEW YORK] A trio of former Citigroup executives who left the bank last month have formed Motus Capital Management, a firm that wants to make it easier for high-net-worth individuals to bet on cryptocurrencies.

Alex Kriete, Greg Girasole and Frank Cavallo are seeking to raise US$100 million for a pair of actively managed hedge funds that will focus on digital assets, the 3 said in interviews. They are each founding partners of Motus, the Latin term that's the origin of the word "motor".

"Clients are hungry for returns," Kriete said. "They're wanting exposure, but they have a hard time telling what's scammy and what are real investment opportunities."

Kriete and Girasole made waves last month when they left Citigroup less than a year after being picked to oversee a new digital-assets group inside the Wall Street giant's wealth-management division.

Before that, Kriete managed US$3 billion and Girasole US$5 billion for Citigroup private-bank clients.

Cavallo was most recently an investment counselor at Citigroup, where he oversaw US$8 billion of assets and held roles inside the firm's cross-asset sales and trading division.

The three will invest their own wealth in the Motus funds, they said in the interviews. The funds will not self-custody - meaning they will not hold control the private keys for their digital assets - and will limit the assets they hold with exchanges as part of their efforts to satisfy due-diligence processes with sophisticated investors.

"We are working with best-in-class providers to meet the fiduciary standard our clients expect," Girasole said.

New York-based Motus intends to offer both growth and income funds. The growth fund will focus on investing in tokens with smaller market capitalisations that larger funds find it harder to invest in, Cavallo said.

"We think we hit the sweet spot," he said. "With assets like Bitcoin and ETH, clients can do that on their own. They don't need to pay someone to buy Bitcoin."

Nascent sector

Crypto hedge funds are a nascent part of the broader asset-management industry. Globally, such funds have about US$3.8 billion in assets under management, according to a report by PwC. Less than half of all crypto hedge funds have assets under management of more than US$20 million, PwC found.

Cavallo, Girasole and Kriete are part of a growing exodus from New York-based Citigroup for the world of cryptocurrencies.

Matt Zhang, who was co-head of Citigroup's structured-products trading and solutions division, left in October to start a fund that trades digital assets and makes venture investments in crypto companies, while Christopher Perkins, the former co-head of Citigroup's futures, clearing and foreign-exchange prime-brokerage businesses, was hired in August as a managing partner and president by CoinFund, a blockchain-focused investment firm.

Sabrina Wilson, former co-head alongside Perkins, was named chief operating officer of Copper, which offers custody and prime-brokerage services for digital assets. BLOOMBERG