Hong Kong crypto hedge fund targets ultra-wealthy: distributed HK$70 million during market crash, Li Lin among its clients
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Hong Kong crypto hedge fund targets ultra-wealthy: distributed HK$70 million during market crash, Li Lin among its clients
Most trading strategies for asset classes in traditional financial markets are primarily based on fundamentals, quantitative analysis, and event-driven approaches, which can be directly applied to cryptocurrency market trading.
Navigating Web3 tides with focused insightsBy Tencent News "DeepView" author Luo Fei
Hong Kong, which had been buzzing for months due to the cryptocurrency scene, has finally quieted down. When Tencent News' DeepView met Ye Yizhou in late June at his office in Central Hong Kong—the city’s prime business district—he said he preferred this calmer version of Hong Kong. The previous frenzy felt unreal and chaotic to him.
Ye Yizhou has been involved in cryptocurrency trading for over six years and is the head of Frontier Rational Asset Management Limited. His fund is currently the only compliant crypto hedge fund in Hong Kong and boasts the best performance among firms holding virtual asset trading licenses in the city. Public records show that 11 funds are now authorized to conduct cryptocurrency investments in Hong Kong.
According to information obtained by Tencent News’ DeepView, Ye's fund is the only one among these 11 that has outperformed the broader market. In 2022, his team ranked third on Barclays’ list of cryptocurrency funds by net return, achieving a 9.2% net yield—while the industry overall suffered losses approaching 50%.
By the end of 2022, Ye’s fund distributed approximately HK$70 million in dividends to its limited partners (LPs).
Ye told Tencent News’ DeepView that during the busiest week of Hong Kong’s crypto boom in April this year, he hosted more than 50 groups coming to “explore crypto opportunities.” These visitors arrived from the U.S., the U.K., mainland China, Singapore, Dubai, and elsewhere, hoping Hong Kong could become a haven for their lives as “digital nomads.”
They believed that if Ye and his team could profit under Hong Kong’s regulatory framework during what was arguably the toughest year for crypto—2022—then perhaps Hong Kong was worth a try. That year saw major collapses: Terra’s stablecoin Luna imploded in May, followed by the November downfall of FTX, then one of the top three exchanges. Bitcoin subsequently plummeted from nearly $40,000 in early May to $16,000.
Yet Ye believes Hong Kong isn’t suitable for all crypto enthusiasts—not even for some looking to transition from traditional finance into crypto. Instead, it favors those with strong traditional financial expertise.
Unlike most grassroots crypto traders, Ye is a Wall Street-trained “professional.” He graduated from Columbia Business School in the U.S. and joined Fore Research & Management, a well-known hedge fund on Wall Street, where he spent years engaged in convertible bond arbitrage trading.
In 2014, Ye returned to Hong Kong and joined a local equity hedge fund. Out of personal interest, he began investing in Bitcoin early on. He told Tencent News’ DeepView that due to unclear regulations around Bitcoin trading at the time, he and his peers started large-scale secondary market Bitcoin trading as early as 2017. Later, he left the firm to start his own venture, establishing Rational Capital Management Limited in Hong Kong.
Ye explained that trading strategies in traditional financial markets primarily rely on fundamentals, quant models, and event-driven approaches—all of which can be directly applied to crypto trading. Crypto trading, relatively speaking, is easier because most participants are retail investors without professional financial or trading skills. When seasoned professionals from traditional finance enter the space, they effectively trade against these less-informed individuals. In global traditional financial exchanges (excluding A-shares), the ratio of institutional to retail investors is roughly 8:2.
Ye refers to this as the “knowledge premium” in crypto. In a 24/7 trading environment where global participants trade the same assets simultaneously, behaviors and logic vary significantly—creating abundant profit opportunities for professional traders, more so than in traditional finance.
Unlike many veteran crypto players, Ye was among the first in Hong Kong to apply for a cryptocurrency fund license, securing it in early 2022. By early 2023, his firm became the first investment institution in Hong Kong permitted to conduct multi-strategy crypto trading—the definition of a hedge fund.
Ye told Tencent News’ DeepView that regulators not only assess fund managers’ capabilities but also closely examine risk management within multi-strategy frameworks, investor protection mechanisms, and the fund’s trading history and conduct.
Tencent News’ DeepView learned that most funds currently operating in Hong Kong have chosen not to pursue compliance or rush to obtain regulatory licenses. Many operate using their own or friends’ money, avoid external fundraising, and function essentially as individual investors.
Among all licensed funds in Hong Kong today, only Frontier Rational has maintained a full fiscal year of continuous trading records since early 2022.
Ye told Tencent News’ DeepView that from day one, he and his team made a firm commitment to being regulated—a path rooted in his background in traditional finance.
His goal is to eventually open his fund to more institutional investors. According to Tencent News’ DeepView, Frontier Rational’s capital comes not only from Ye himself but also includes high-net-worth clients such as Li Lin, founder of Huobi Group.
Ye and his team have gradually begun engaging with established family offices in Hong Kong and even approached leading private banks to identify suitable product distribution channels. Ye told Tencent News’ DeepView that fundraising pressure is currently low; instead, he prefers listing the fund through institutions or family offices to attract wealthy individuals.
This preference may stem from his traditional finance roots. Besides favoring regulation, he prefers working with institutions—what he calls “bulk listing”—to reach a broad base of affluent investors with demand.
Tencent News’ DeepView learned that these top-tier private banks indeed cover most of the ultra-wealthy in Hong Kong and mainland China. However, they impose strict requirements on listed funds—including compliance, verifiable trading records, and sound trading strategies. Typically, a track record of at least three years is required. Given Hong Kong’s current landscape, the longest available record is just 1.5 years. Ye’s fund is no exception.
To meet the rigorous standards of top private banks, Ye and his peers must wait another 1.5 years. However, Tencent News’ DeepView learned that some Chinese financial institutions are actively accelerating the listing process for crypto funds.
Some Hong Kong-based wealthy individuals have told Tencent News’ DeepView that they are genuinely interested in regulated crypto funds and hope to allocate assets through formal institutions. Over the past years, amid the wild growth of the crypto market, many of them dabbled in crypto investments—all of which, without exception, ended in losses.
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