where is it going? Into defense fund accounts. That is a large reason why, despite a lot of investment into the space, the community seemingly ebbs. Evangelists will state that the reason Bitcoin is not growing is because people are not doing a good enough job promoting it, but when you have a consortium like R3 looking into blockchain technology, that’s not the problem.

Instead, the real problem is that much investment into Bitcoin is going into a certain black hole: defense funds. This money sits there until one day the firm faces some sort of legal kerfuffle.
Not to mention, 2014 was the year of patent applications, many of which have been published in recent months. So, again, legal work. It costs money to file a patent and it costs money to defend a patent lawsuit.

There’s been approximately $1 billion put into the space, into all sorts of firms. But it costs millions of dollars to operate many Bitcoin businesses in the US in line with on-the-books regulation. You never know when your business model, or the Bitcoin business model of an associate or partner, will land you on trial or on the witness stand. Thus, the Bitcoin defense funds.

There is a long list of organizations and individuals who have accepted Bitcoin donations to go towards their legal defense funds, including Brandon Shavers, the Bitcoin Foundation, Edward Snowden, Ross Ulbricht, Charlie Shrem, Pascal Reid and every company in the space that has taken on funds. In 2014, banks secured more money for their legal defense funds. As Reuters reported,

Bank of America, Citigroup, Goldman Sachs and Morgan Stanley all added hundreds of millions of dollars to funds they have set aside to pay for the cost of litigation, including legal fees, fines and settlements. All four banks are facing mortgage-related investigations by federal prosecutors located in different parts of the country.

It makes sense that, considering their lesser liquidity, firms in the Bitcoin industry are dedicating a greater deal of their resources to legal defenses than keystone financial institutions. This leaves its imprint on Bitcoin.

Via: https://www.cryptocoinsnews.com/where-is-all-that-bitcoin-vc-money-going/