A steep 15% decline in asset value has befallen Stack BTC, a bitcoin treasury company backed by Reform UK leader Nigel Farage. Since its inception in March this year, the firm's investments have lost £565,000, prompting warnings from finance experts regarding the inherent risks of such ventures.
Mr Farage, who holds a £215,000 stake in Stack BTC, has publicly associated himself with the company through promotional videos, including one where he spent £2 million of its capital on bitcoin. A Reform UK spokesperson clarified that Mr Farage's involvement is limited to his capacity as a shareholder, but the Liberal Democrats have raised concerns over potentially risky cryptocurrency investments and called for a prohibition on MPs promoting specific financial services.
Notable figures within Stack BTC include Paul Withers, the largest shareholder with 20.72% of shares, who also owns gold dealer Direct Bullion. It was recently disclosed that Direct Bullion paid Mr Farage £270,000 for 12 hours of promotional work. Mr Farage holds 5.61% of Stack BTC shares, making him the second-largest shareholder with voting rights. Former Conservative Chancellor Kwasi Kwarteng serves as executive chair, holding 3.55% of its shares.
Financial strategists have underscored the extreme volatility of such assets. Susannah Streeter, chief investment strategist at Wealth Club, commented that the steep fall in value highlights the brutal volatility of these assets and the lack of diversification in companies solely holding bitcoin. She cautioned against investing in firms endorsed by public figures, noting that such endorsements can create a false sense of legitimacy and de-risk the investment in the eyes of the public, which is often not the case.
The Reform UK leader's interest in cryptocurrency has previously been scrutinised, particularly following reports of a £5 million undisclosed gift from crypto billionaire Christopher Harborne, leading to a standards probe for non-declaration. Furthermore, Mr Farage and his party have advocated for cryptocurrency deregulation, including proposals for a 'bitcoin reserve fund' and allowing HMRC to accept crypto for tax payments. Dan Coatsworth, head of markets at AJ Bell, pointed out that Stack BTC has undergone multiple name changes and, despite announcing intentions to build a portfolio of cash-generative businesses, has so far only shown a series of ill-timed bitcoin investments.