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Crypto Rich Asians: The entrepreneurs making megabucks in the high-risk crypto space

Cryptocurrency entrepreneur Jeff Yew. Source: Supplied

Starting a business is no easy feat, particularly when it’s a cryptocurrency venture. Meet these Chinese Australian entrepreneurs who have launched businesses in the nascent sector while navigating its tricky regulatory and volatile waters.


Highlights:

  • People from Asian backgrounds are typically bolder when it comes to nascent asset classes, says one cryptocurrency entrepreneur
  • There are many investors who may be crypto-rich but cash-poor because until they sell, they haven’t realised their gains, says a cryptocurrency investor
  • ASIC’s MoneySmart website warns investing in virtual currencies and initial coin offerings is highly speculative

The first time Ting Wang traded bitcoin was by accident.  

He was playing the video game Runescape in 2015 and to trade in-game items, the leading cryptocurrency needed to be used as the medium. 

He sold 10 bitcoins valued at A$300 each. 

“Obviously it’s a mistake in hindsight. We all make those kinds of mistakes. Back then bitcoin was never something that was on my investment horizon,” says Mr Wang.  

Fast forward a couple of years, Mr Wang not only invested in the cryptocurrency and other alternative digital assets known as “altcoins”, but he’s also made a fortune creating a local exchange platform for investors to access the nascent market.  

“I can definitely retire now. I’m quite comfortable. I don’t have any financial pressure right now,” says the Chinese-born Australian.

A capital raise next year is likely to turn Ting Wang into a ultra-high-net-worth individual.
A capital raise next year is likely to turn Ting Wang into a ultra-high-net-worth individual.
Supplied

With a background in taxation, law and fintech, Mr Wang, 32, was quick to realise high growth in the space.  

“We saw some arbitrage opportunities between Australia, China and the US. Sometimes there might be a 10 per cent price gap just between the Australian and US exchange.  

“That’s what gave us a lot of early success and then we built Coinstash from there.” 

From an April crowdfund that raised $2.8 million for the company, Mr Wang says the plan for Coinstash now is to allow Australians to spend, earn interest on, and borrow against their digital coins, pending regulatory approval. 

A surging bitcoin price ($77,600 at the time of this writing) and increasing institutional adoption have helped drive innovation in the space.  

It has made a lot of people rich too.

Recently, Mr Ting’s Brisbane-based company, of which he owns a 42 per cent stake, was recently valued at $20 million. 

Another capital raise pencilled in for next year is expected to push Mr Wang into the ultra-net-worth individuals’ group for people with assets of $30 million or more.  

I’m not the type of person who is very fussed by lifestyle. A private jet would be nice but that would be used for business purposes.

Though Mr Wang and others may be classified as crypto rich, it’s not easy to get early access to cash. 

“Just because you are worth X amount, you’re worth multimillion dollars on paper, even just on bitcoin or through a company, it’s not as easy as cashing it in and start spending,” he says.  

Coinstash's co-founder Ting Wang.
Coinstash's co-founder Ting Wang.
Supplied

Mr Wang says he will need to wait for a liquidity event where his company becomes publicly listed or is bought by a bigger player before shareholders, himself included, get rewarded in dollar terms.  

“I think it’s going to take a number of years before we reach that stage,” he says.  

Targeting the rich in Australia 

Another prominent Chinese-Australian in the cryptocurrency space is Jeff Yew. 

The 27-year-old resigned as the Australian head of the world’s largest cryptocurrency exchange Binance in April to launch his own start-up Monochrome Asset Management for wealthy and institutional investors.  

Many of Monochrome’s clients are family offices and self-managed super fund investors who might be looking to add digital assets like bitcoin or ethereum on their balance sheets.

Asian investors currently make up 30 per cent of inquiries for Monochrome, according to Mr Yew, even though they haven’t launched into the Asian Australian market.

Australia has a big and wealthy Asian population. Asians are typically bolder when it comes to nascent asset classes.

The Malaysian-born entrepreneur says the bitcoin-wealthy community are sensitive to disclosing their net worth.  

“Building a company like Monochrome, a regulated financial service in this industry, specialising in a niche asset like bitcoin is not a cheap effort. That’s why not many people do it,” he says.  

Mr Yew, who comes from a family of architects and once practised as one himself, was an early believer in bitcoin as a store of value, having first heard about it on Reddit on April 4, 2013, after the financial crisis in Cyprus.  

Screenshot of Jeff Yew's first social post in relation to Bitcoin.
Screenshot of Jeff Yew's first social post in relation to Bitcoin.
Supplied

“The government basically confiscated people’s saving to bail themselves out. To me, it doesn’t sound fair. You work hard all your life, you saved up all this money. What gives the government the right to come in and confiscate all your assets?” he asks.  

“People started to propose bitcoin as an alternative in the comments and that’s how I stumbled across that post.” 

Mr Yew says he has more than 30 per cent, but less than 60 per cent of this personal wealth allocated in the digital currency, equal to “a conservative allocation in the bitcoin world”. 

I see bitcoin as digital property. I'm the mega landlord of digital assets. I don’t trade my land. I plan to monetise them in the form of lending or leasing.  

He says more and more people are warming to bitcoin being part of their investment portfolios.

“Everyone wants it, but no one wants to be seen to have it.” 

Derek Rose, a cryptocurrency reporter based in Sydney who lost $9 million worth of cryptocurrency in a 2018 Christmas crash, says nobody wants to be seen if they’ve lost money either. 

“It’s not something that people really want to be known for,” he says.  

How risky is investing in cryptocurrencies? 

Every so often, investors who have been swept up by the bitcoin boom and lose their life savings share their heart-wrenching accounts of their experience as a warning to others.  

In August, one anonymous Reddit user said he put all his life savings into a type of trade called leverage futures – betting that bitcoin’s value would continue to rise.  

“I started future trades and managed to turn the 1.7 BTCs into 2.1 BTCs, the classic beginner luck,” he wrote. 

When it unexpectedly fell, he says he couldn’t look at himself in the mirror.  

“I completely messed up guys, my life savings are gone for good, I have learned a devastating hard lesson,” he added.  

To prove his story, he posted screenshots of his future trade being slowly liquidated as bitcoin fell rather than rose in value.

Prudent_Plum_7644/Reddit
Screenshot showing the investor's fund slowly draining away.
Prudent_Plum_7644/Reddit

The federal government’s Moneysmart website lists risks associated with cryptocurrencies, warning investors could lose “a lot of money” if they buy into an ICO or cryptocurrency without doing research first. 

The financial regulator has also warned Australian traders to be cautious when trading through unlicensed entities to invest in other financial products such as crypto futures and options.  

Stephen Diehl, a United Kingdom-based software engineer who researches bitcoin, says the assets do not produce any economic value.  

“It is a pure speculative activity of people gambling on the random movements of prices and the only output is simply shuffling around in a company at insane cost,” he previously tweeted.  

He added that bitcoin remains a “pyramid-shaped investment scheme” that requires “greater fool” investors for the investment to succeed.  

The crypto-rich, cash-poor 

Jemma Xu was a traditional banker before she turned her attention to the digital asset space.  

The Australian crypto investor and venture capitalist, based between Sydney and Beijing, describes herself as a regular investor who may have even lost money.  

After an unprecedented boom in 2017, the price of bitcoin fell 65 per cent in one month at the beginning of 2018.

“If I held on, I would have had a lot more wealth, basically,” says Ms Xu.  

Since the 2018 crash, Ms Xu says she considers any collapse of 50 – 80 per cent in the price of bitcoin to be temporary and believes in the fundamentals of the digital asset.  

“Will it be a store of value in 20 to 30 years' time? I don’t know. There might be a better thing that comes along. But, at the moment, I’m yet to see that better thing,” she says.  

Unless she needs the cash, Ms Xu says she considers herself to be a “holder”, or holding on for dear life, crypto-speak for investors who vow never to sell their cryptocurrencies. 

Ms Xu says there are plenty of crypto wealthy Australians in the community, not just Asians.  

“If they haven’t realised their gains, they can’t live luxuriously. Maybe that’s why most people live very normal lives. Some might even be cash-poor because they have it tied up and they’re not willing to sell,” she says.  

When they do cash out, the ATO warned investors earlier this year, they have data-matching capabilities to ensure taxpayers aren’t hiding cryptocurrencies and avoiding their tax obligation.  

Until then, Ms Xu says there are plenty of investors who have a long-term belief in digital assets such as bitcoin. 

“They’re not going to want to sell anytime soon.”  

DISCLAIMER: This article is not an advice or technical analysis of investments. Research carefully and consider the opinions of financial experts before choosing the type of investment.