Bitcoin Startup Buttercoin Draws Wedbush as InvestorOlga Kharif
Wedbush Securities Inc., the Los Angeles-based financial-services firm founded in 1955 by friends fresh out of college, took a stake in bitcoin venture Buttercoin and is using the platform to buy and sell the virtual currency.
The deal makes Wedbush, with offices from Manhattan to Honolulu, the first Wall Street firm to announce a stake in a bitcoin startup, Buttercoin Chief Executive Officer Cedric Dahl said. Buttercoin, with backers including Google Ventures and Y Combinator, helps businesses shift between cash and bitcoins to use the virtual currency or provide related services to clients.
“Wedbush will be bringing in their friends from Wall Street,” Dahl said in an interview. The Palo Alto, California-based startup plans to talk with potential investors in January about raising more than $25 million, he said, declining to specify the size of Wedbush’s holding.
Financial professionals have expressed divergent views of bitcoins since prices surged in 2013. People from firms such as Goldman Sachs Group Inc. have set out to develop ventures, while some financial companies experiment with the technology. Finance-industry leaders such as JPMorgan Chase & Co. CEO Jamie Dimon and billionaire investor Warren Buffett have predicted bitcoins won’t last.
Gil Luria, a Wedbush analyst who helps oversee the firm’s involvement in the virtual currency, confirmed it bought a stake and declined to comment on the size. Wedbush offers services such as brokerage, clearing, investment banking, equity research and asset management.
“Immediate term, we have an account with Buttercoin, we are buying and selling in the limited capacity,” Luria said in an interview. “Longer term, we’d like to help our investor customers to sell on Buttercoin.”
Luria predicted in May it will take one to three years for broader adoption that will challenge established businesses.
Bitcoin investments so far have been led by Silicon Valley venture capitalists and funds such as Pantera Capital, which is backed by Fortress Investment Group LLC.