Crypton Private Investors LP



Crypton Private Investors LPProspectusSummaryCrypton Private Investors LP an investment management company wherein Crypton Private Equity LLC acts as the General Partner. The company was founded on 11 May 2016 in the State of Missouri as a Limited Partnership.The purpose of Crypton is to increase its asset holdings in order to return profits to its Partners. Months that return a profit above the high water mark will pay a dividend to the Partners based on percentage of company ownership. One half of the profits are re-invested in the company and the other half are distributed to the Partners. Partners may elect to re-invest individual earnings each month if they so desire.The General Partner charges a management fee only if the fund returns a profit. The management fee is 20% of distributed profits. If the fund doesn’t make money, the General Partner doesn’t make money. The General Partner does not charge a fee on assets under management.Historical PerformanceCrypton Private Investors LP was legally established on 11 May 2016, however prior to its inception the trading strategy employed by Crypton was tested beginning in Nov 2015. During the evaluation period the strategy returned between -11% and 80% monthly. Overall return for the trading strategy since Nov 2015 is 12%, including impressive performance during the crypto-market downturn that occurred from March 26-May 5, 2016. Up until 11 May 2016 only the trading arm of the company was allocated any capital. The lending arm, which comprises approximately 50% of the company’s current assets, was not established. This allowed for a sanitized evaluation of the trading strategy without the added complexity of lending earnings. During the evaluation period, various parameters of the trading algorithm were adjusted. Additionally, several versions of the software were back-tested against historical market trade data in order to determine optimum parameter limits.. Monthly returns for Crypton are published here: What the company doesCrypton’s portfolio is currently positioned with approximately 50% of its assets traded in a specific strategy that takes advantage of the high volatility existing in several crypto-currency markets. In each market the strategy trades several hundred times per day with proprietary software developed exclusively for Crypton. The software is termed the Crypton Volatility Engine. Volatility in each trading pair provides numerous entry and exit positions such than every day approximately 20,000 trades are completed daily. Cumulative 30-Day traded volume has ranged from $250,000 to $450,000. The screenshot below shows one example of the trading strategy operating on the Bitstamp Exchange on Feb 29, 2016. On the overlaid program the short green lines represent completed buy trades and short red lines represent competed sell trades. Short Term LoansThe company’s portfolio is currently positioned with approximately 50% of assets in short term loans to margin traders on the Poloniex Exchange. Duration of these loans is up to 2 days with interest rates ranging from 0.0001% daily and noted to be as high as 0.52% daily. Expected annual return on the loan portfolio is 10-20% APR. Default rates on these loans are extremely low due to the way that Poloniex manages its margin trading accounts. Any account that reaches its maintenance limit is immediately liquidated on the exchange. Thus traders have an enormous incentive to close their margin positions before meeting the maintenance limit. In the event a trader’s maintenance limit is insufficient to cover the liquidation, the trader’s account is frozen until additional funds are added to replace the negative balance. For a trader to default on its margin account they would have to first exceed the maintenance limit on the account, then have the account liquidated at a loss, then be unable to supply additional funds to cover the loss, i.e. professional bankruptcy. The scenario is unlikely but not impossible. However, because the loans are spread out among hundreds of individual accounts, losses are expected to be kept to a minimum. Founder’s VisionCrypton is currently using four exchanges, Poloniex, Bitstamp, GDAX, and Bitfinex. As the company grows the number of exchanges used will be increased to mitigate the risks of an exchange default or theft.Crypton’s overhead costs are low. Crypton will be configured to adhere to the rules set for in SEC regulation D. Software used to execute the trading and lending strategy is already developed. Trading fees are based on a percentage of traded volume and currently approximately 0.15%. The speed of transfer and the currently unregulated nature of this new technology will likely continue to keep crypto-currency extremely volatile in the near to medium term. Because of this expected volatility and the implications a large market downturn would have for asset valuation, Crypton pledges to remain 100% capitalized. The company will not trade on margin and will not take out any type of loan or bond. Although asset values may fluctuate wildly as crypto-currency experiences growing pains, Crypton will always remain debt free.Crypton is committed to providing transparent record keeping and accounting. All transactions will be published for review and verification.Possible OutcomesIt is possible that the company will fare poorly. Government regulation currently favorable to crypto-currency could change. The underlying cryptographic security could be breached. The interest in crypto-currency could wane. It is not entirely out of the realm of possibilities that fiscal responsibility returns to governments of their own accord. Any of these events would be a major setback for crypto-currency generally. However, notwithstanding these risks, the future looks bright indeed for the company. The trading strategy has been operating in the 12-40% APR range for some time. The loan portfolio is projected to return 10-20%, and it is my personal belief that a year from now most, if not all, crypto-currencies will see a nominal increase of 5-50% against the dollar. Investors would be wise to look for emerging technology that has the potential to fundamentally change the way the world works. Early adopters of Bitcoin, the first crypto-currency, have seen dramatic increases in value. In 2011 one Bitcoin cost $0.30. Over the last 5 years the price has seen extreme volatility to over $1100 per coin in early 2014, $225 one year later. In July 2015, I bought Bitcoin at $240. The current market price at the time of writing is around $450.Sincerely Yours,Christopher Ryan LarsenCrypton Private Investors LP ................
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