FTX had billboards up all over Chicago. A hedge fund can't do that; the regulations on qualified investments (at least pre-JOBS) prohibit promotion to retail investors.
Re:Let Crypto Burn
by SkyMarshal on Sunday November 20, 2022 @02:38PM
(#33684456)
Yeah all that advertising was gross. Definitely needs to be shut down.
There’s another reason. Hedge funds don’t want your $2,000-20,000.
Re:Let Crypto Burn
by dan-robertson on Sunday November 20, 2022 @06:13PM
(#33686559)
It might depend a little on the fund but I think it’s probably right that conditional on a client investing a small amount of money, they are more likely a big pain to deal with. On the other hand I think startups often accept pretty tiny (eg 5-10k) angel investments. But maybe I’m wrong about that.
I think a typical hedge fund won't accept less than $100k. For a lot of brand-name funds, the minimum is $1M or higher. Many of them won't accept new investors at all, or when they do, it's for very large amounts of money. For example, Citadel is $10m+. Millenium is $25m+.
I think this is already more or less the case. The SEC recently updated the accredited investor standard to include not just means testing, but alternate sophistication tests like Series 7/63/etc, CFA iirc. I’m not sure how/if they fully enforce it or not, but they do to at least some extent, which is why FTX, Binance and others run two versions of their services, a US-based one and an international one.