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This complements another wild theory I've heard, which is that the Medallion Fund exists to launder money from corrupt states.

Say you have a $200B state pension fund - you invest a portion in the loser fund, earn a portion back as personal wealth on the winner side.

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Your theory is interesting but it's just speculative fodder. Getting capacity in something like Medallion is pretty much impossible. The lowly head of a state pension fund would never have access to such capacity.

Doing this sort of thing destroys the reputation of hedge funds and is not a long-term positive expected value decision. (See Bluecrest: https://dealbook.nytimes.com/2014/05/29/fund-within-a-fund-c...)

While skepticism of Medallion is warranted, we're not doing ourselves favors by explaining away its success with activity that would have much more likely killed the firm vs sustained it.

This is deeply insightful.

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