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Hedge fund manager Stanley Druckenmiller has backed a little-known trading platform that plans to offer U.S. investors access to high-risk derivatives that have long been popular among crypto traders.
Intercontinental Exchange and crypto exchange tradeXYZ said Thursday they had agreed to set up so-called offshore perpetual contracts – leveraged derivatives that trade 24/7 and allow big bets with only a small cash stake – linked to stocks, cryptocurrencies and other assets.
Druckenmiller posted on
A spokesperson for Druckenmiller confirmed the social media post was authentic, but declined to provide additional details. His intervention is likely to add fresh scrutiny to the debate over so-called criminals that has pitted traditional trading platforms like CME Group against fast-growing prediction market players including Kalshi and Polymarket.
Regulators at the U.S. Commodity Futures Trading Commission this year allowed a handful of companies, including Kalshi, to offer perps for the first time. The move immediately proved divisive, sparking a lawsuit from CME, which alleged the CFTC’s approval violated existing regulations.
Proponents argue that criminals – which never expire and use a mechanism that anchors them to the spot prices of the assets they track – provide flexibility by allowing traders to enter and exit positions at any time.
But derivatives have been called “the most dangerous product in crypto” by consumer advocacy group Better Markets. Criminals “amplify risk” throughout the financial system by “allowing retail investors to control positions worth far more than the capital they invest,” Better Markets said.
Derivatives became very popular at the start of the Iran war, as traders flocked to Hyperliquid, which is unregulated, to place continuous bets on energy markets during weekends, when traditional futures markets are closed.
Druckenmiller, the legendary 73-year-old macro investor who runs his family office Duquesne Capital after returning money to outside investors more than a decade ago, is best known for his prescient bets on currencies and rates. He was hired to manage George Soros’ famous Quantum Fund in 1988 and played an integral role in the company’s infamous bet against the pound.
Although still tied to traditional macroeconomic trading, Druckenmiller has long traded across asset classes and has been an early investor in technology companies in recent years.
While Druckenmiller rarely publicly discusses his investments, in May 2024 he explained on CNBC how he backed AI company Perplexity. In recent private remarks, Druckenmiller questioned the sustainability of the broader AI business and said there was a “good chance” the market was in a “profit bubble” due to AI development.
“It’s been an incredible journey as far as AI is concerned,” he said at a private conference last month, as previously reported by the FT. “I think we’re late enough in construction that we need to start getting a little concerned.”
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