Financial services giant JPMorgan Chase is reportedly investing hundreds of millions of dollars in an artificial intelligence (AI)-driven hedge fund with crypto incentives.
According to a new Bloomberg report, JPMorgan Chase is investing $500 million in San Francisco-based Numerai, a hedge fund backed by billionaire investor Paul Tudor Jones that leverages crowdsourced AI models for trading.
[adinserter block="1"]Numerai founder Richard Craib believes JPMorgan was impressed by the firm’s successful turnaround, posting a 25% return last year after suffering a big loss in 2023.
Says Craib,
“That’s when investors like JPMorgan started to be like, ‘Whoa, you guys aren’t just back, you’re way back.’ People don’t really want to invest until there’s a track record. And when you’re doing something super unusual and different, like we are, they might wait even longer before they get excited.”
In addition to using democratized trading and AI, Numerai issues its own native token, Numeraire (NMR), which surged amid the JPMorgan investment news.
NMR is trading for $23 at time of writing, up 105.2% on the day. With a market cap of $183.4 million, the Ethereum (ETH)-based token is the 350th largest crypto project.
The NMR tokens are used as rewards or penalties for data scientists who wager their tokens in competitions over who can best predict the market.
Craib says the firm’s model allows it to avoid large labor costs incurred by traditional firms competing to hire top talent.
“It’s the question of waste: did you really need to suck up that much capital and talent to make a hedge fund? If you could have one hedge fund that was connected to all of the talent in the world and gave away very high-quality data, then you would’ve really done something and changed finance.”
JPMorgan declined to comment for the story.
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