Virgin Group Chairman Richard Branson and Yahoo Inc. co-founder Jerry Yang are part of an investor group that plowed $30 million into Bitpay, valuing the bitcoin-payments processor at about $160 million in the biggest venture-capital investment in the digital-currency industry.

The deal, announced Tuesday, shows venture capitalists are betting that bitcoin will keep gaining acceptance despite a string of legal and regulatory setbacks that have undermined its reputation and caused its price to fall by more than half since December.

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