Seventeen months ago, a former Wall Street investment banker who specialized in distressed assets took to Twitter to announce he had bought a cryptocurrency for 50 cents per coin. "At $0.50, risk/return felt right," tweeted Barry Silbert, founder and chief executive of a private New York-based company called Digital Currency Group, or DCG.
It has turned out to be a great bet. The digital coin -- ethereum classic -- was trading this week at as much as $47 -- more than 90 times higher -- before falling back. That's an even bigger rise than that of bitcoin, a far better known cryptocurrency, over the same period.
Silbert continues to be a big backer. In April, a DCG subsidiary launched a private investment fund that tracks ethereum classic's price and donates part of its fees to developing the technology behind the currency. He still posts bullish comments about the digital coin on social media, including a "pro tip" last month advising an investor to "close out" his short position before an "Ethereum Classic Summit" organized by DCG was held in Hong Kong.
On Dec. 12, Silbert tweeted that three cryptocurrency funds the DCG subsidiary offers now had more than $3 billion of assets under management – up from $164 million at the start of the year.
Silbert's cheerleading for ethereum classic and other digital coins he or his company own has led some critics on Twitter to nickname him "Barry Shillbert." Silbert declined to comment on that barb.
The story of Silbert and his role in ethereum classic's rise illustrates the current hype over cryptocurrencies - strings of computer code that aren't backed by governments, face little regulation and have become magnets for speculators.
Social media platforms are now filled with predictions by cryptocurrency enthusiasts about the price of bitcoin and other digital coins, many of which have soared in value this year.
But two securities lawyers told Reuters they believed that some of Silbert's social media postings about the price of ethereum classic could draw the attention of U.S. regulators. Although the digital coins are not considered securities, Silbert is chief executive of Grayscale, a DCG subsidiary that offers an ethereum-classic investment fund whose shares are securities, according to Grayscale's website.
The attorneys said his postings on price and the "pro tip" he gave to one investor could raise red flags with regulators who enforce federal securities and commodities laws and rules that prohibit price manipulation.
A spokeswoman for the U.S. Securities and Exchange Commission declined to comment on Silbert.