The reason for Multicoin Capital’s serious loss comes from being involved from FTX, as well as owning FTT and many Solana tokens.
According to CoinDeskin its 2022 summary letter sent to investors, Multicoin Capital admitted that its hedge fund value has declined by 91.4% because of a series of events that happened to the cryptocurrency market in the past year. , which was directly affected by the rapid collapse of the crypto exchange FTX.
The letter contains the passage:
“While the fund successfully avoided the crashes of LUNA and Three Arrows Capital, we did not anticipate the bankruptcy of FTX and the consequences that followed. After a successful 2021, 2022 is the year the fund recorded its worst investment results since its inception.”
Previously, in an update to investors in November 2022, shortly after the peak of the FTX crisis, Multicoin Capital revealed that it was stuck up to 10% of the total assets on the platform, as well as the portfolio of assets. The asset owns a large amount of SOL, SRM, and FTT – Solana-based tokens that also sold off severely as market confidence in FTX evaporated.
Founded in 2017 by Kyle Salmani, Multicoin Capital is a hedge fund that invests in liquid crypto tokens. Although it had a bad year in 2022, throughout its history, the return of the fund still reached 1.376 percent.
As the crypto market rallied markedly in January 2023, Multicoin Capital confirmed the fund’s value increased by 100%, bringing the total return to 2,866%.
In order to prevent the risk of getting stuck on the exchange in the future, the fund announced that from now on it will only maintain a sufficient amount of assets to trade within 48 hours on any platform, changing the process. manage collateral to reduce the amount of assets that must be maintained on the derivatives trading floor, as well as find a partner to custody assets to reduce risk.
The current strategy of Multicoin Capital will still be to put faith in the long-term prospects of cryptocurrencies and will not try to catch short-term ups and downs.
As for assets stuck on FTX, Multicoin Capital will set aside that money to serve claim activities. In addition, the amount of cryptocurrency withdrawn in the days before the bankruptcy of the exchange will not be touched in case the court orders the withdrawal.