One of the leading Wall Street veterans now investing in cryptocurrencies said Tuesday he would sell digital currency litecoin after its surge.

"I don't think it will have the same legs that bitcoin would. I would sell it here versus buying bitcoin," Michael Novogratz, formerly a macro hedge fund manager at Fortress Investment Group, said on CNBC's "Fast Money."

Novogratz is now CEO of Galaxy Investment Partners and he said Tuesday the firm is launching its cryptocurrency fund by the end of this week. News that Novogratz was launching a $500 million cryptocurrency fund first broke at the end of September.

"The best investments by a long shot have been these exchanges. The exchanges are printing money right now," Novogratz said. "You wish you owned a big chunk of Coinbase, or Bitfinex, or any of these big exchanges."

Litecoin briefly climbed 59.5 percent for the day to a record high of $341.72, up more than 7,700 percent this year, according to CoinMarketCap. At one point, litecoin was up more than 70 percent over the last 24 hours. The website showed the digital currency had a market value of $18 billion, ranking fourth behind bitcoin, ethereum and bitcoin cash.

A key differentiator between litecoin and bitcoin is transaction cost. The median transaction fee for litecoin on Monday was about 7.9 cents, versus $14.17 for bitcoin, according to BitInfoCharts.

However, Novogratz said he expects bitcoin's gains to accelerate. "I think at this pace it could hit $40,000 in three months, two months," he said, noting the only risk is that the price surge generates too much negative attention from regulators.

Jay Clayton, chairman of the U.S. Securities and Exchange Commission, warned in a lengthy Monday statement about the dangers for investing in cryptocurrencies and initial coin offerings.

Meanwhile, some of the world's largest futures exchanges are eager to launch bitcoin futures. Cboe became the first major exchange to do so on Sunday, and CME is set to launch its own product this coming Sunday.

Institutional investors are "absolutely not" invested in cryptocurrencies yet, but they are watching them carefully, Novogratz said.

"All of these guys are looking at this as a potential asset class," he said, citing a recent visit to one of the biggest pension funds in the world. "Mark my words, when Goldman Sachs starts trading it, you're going to see the big pensions start coming in."

Goldman Sachs said in a statement Monday it will "clear bitcoin futures contracts for certain clients," but overall participation by the major banks was little to none. Trading volume Tuesday in the Cboe bitcoin futures dropped to less than half of Monday's already relatively low level.

Novogratz also apologized Tuesday for his rather scathing comments about his fellow former Goldman partners Steven Mnuchin and Gary Cohn. They are now respectively treasury secretary and chief White House economic advisor.

"I should apologize and you should never call someone an idiot," Novogratz said, adding that his remarks about Cohn were taken out of context.

When asked earlier this week about the Treasury Department's one-page analysis of the GOP tax plan's economic impact, Novogratz told a Bloomberg reporter that "Steve Mnuchin never even modeled the thing — idiot, I-D-I-O-T" and that "Gary Cohn shouldn't be able to live with himself."

— CNBC's Liz Moyer contributed to this report.