Burned by bitcoin -- Son's misadventure tells wider story

Apr 29, 2019 | News On Japan

Apr 29, 2019 (Nikkei) - Masayoshi Son is often called Japan's Warren Buffett. It is a useful comparison as the SoftBank billionaire scours the globe for value investments, and, as with Buffett, some of his choices leave observers perplexed.

News that Son lost $130 million of personal money on bitcoin is now Exhibit A of this phenomenon. As The Wall Street Journal reported last week, the Sage of Tokyo bought the digital currency in late 2017 just as it was peaking near $20,000. He then reportedly dumped bitcoin in early 2018 as prices nose-dived (since then it has recovered to about $5,100).

The story raised a couple of intriguing questions. Who, for example, leaked this embarrassing loss and why? It comes, after all, as investors question the $100 billion SoftBank Vision Fund's bets on Uber, WeWork and other potentially overvalued Silicon Valley unicorns.

The bigger quandary is how a savvy investor who says "I think I'm better than others at sniffing out things that will bear fruit in 10 or 20 years, while they're still at the seed stage" got caught up in cryptocurrency mania?

The answer may have more to do with bitcoin than Son. It is an asset that can seem more pyramid scheme than store of value.

Son is in risk-on mode. The Buffett-like halo investors bestow on him stems from his $20 million bet on an obscure Chinese startup in 2000. The juggernaut that Son helped finance was Alibaba, and his investment was worth $50 billion when that company went public in 2014.

The SoftBank founder is trying to strike gold again. His giant wagers on ride-hailing startups like Southeast Asia's Grab and America's Uber seem part of a strategy of hope. Son needs another big win to keep the Saudi benefactors, who back his funds, happy and writing those multibillion-dollar checks.

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