Multicoin Capital, one of the top venture firms, lost approximately half of its capital to FTX and announced that many players would soon be out of the game.
The firm’s managing partners, Kyle Samani and Tushar Jain commented on the exposure to FTX: “We put too much trust in our relationship with FTX. We had too many assets on FTX.”
The company expects to see more statements from industry participants about liquidity problems and doesn’t expect the market to turn soon. If some participants cease to exist, the market will take time to stabilize. Multicoin is reassuring: “As other companies with assets tied to FTX seek to raise emergency funds, we are looking to buy dislocated assets at attractive valuations.”
The company expressed confidence in the long-term prospects of cryptocurrencies. Just as Lehman Brothers didn’t kill banking and Enron didn’t kill energy companies, “FTX will not be the end of the industry.”
“As the leverage gets cleared out of the system, we expect to see green shoots next year,” the letter to CBNC said. “We know that the builders in this industry and in our portfolio are some of the most dedicated people, and they will not give up. And neither will we.”
Multicoin’s letter to investors said the company’s stuck in FTX with 15.6% of its assets. Multicoin Capital made transactions on FTX, Coinbase, and Binance. In light of recent events, the company transferred funds to non-custodial wallets and Coinbase.
According to Bloomberg news, the funds from FTX might never be returned due to the hole in the company’s balance sheet.
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