In a letter to investors on Thursday, cryptocurrency venture firm Multicoin Capital stated that the fund has dropped by 55% this month due to the collapse of FTX and industry-wide price declines. The firm also stated that the market is expected to get worse before improving.
Although there’s a chance Multicoin will get some of its money back from FTX, since those assets are currently subject to bankruptcy proceedings, it expects to write them off as being worthless. It represents a sharp turnabout for the five-year-old Multicoin, which in July announced the third and largest fund it had ever raised, at $430 million.
The 3,400+ word letter was obtained by CNBC and stated that Multicoin managing partners Kyle Samani and Tushar Jain “put entirely too much trust in our relationship with FTX.” “Too many assets were on FTX,”
The company claimed in a letter sent last week that although it was able to recover about one-fourth of its assets from FTX, the remaining 15.6% of the fund’s assets were stuck there. At the time, Multicoin also disclosed that it had traded on FTX, Coinbase, and Binance, a total of three exchanges. Now, all of its assets—those not “stuck on FTX”—are either stored on Coinbase or in self-custody wallets.
According to Multicoin, the fund currently has no assets that are exposed to any other counterparties. “As we continue to assess the current market fallout, we anticipate some diversification of custodial exposure in the future, with Coinbase expected to remain our primary custodian,” the statement continued.
