According to a letter issued by leading crypto venture Multicoin Capital to investors on Thursday, it is expected that in the coming weeks many crypto firms will suffer losses due to the FTX Derivatives Exchange implosion.
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Notably, Multicoin Capital is not left out as its prices have plummeted by 55% this month similar to every other firm in the crypto ecosystem.
“We expect to see contagion fallout from FTX/Alameda over the next few weeks. Many trading firms will be wiped out and shut down, which will put pressure on liquidity and volume throughout the crypto ecosystem. We have seen several announcements already on this front, but expect to see more,” as outlined in the letter.
Multicoin believes that before a final rebound, the market will get worse with the raving FTX contagion. The crypto venture firm expressed its regrets for plunging its funds as well as trust into the FTX exchange. According to Multicoin managing partners Kyle Samani and Tushar Jain, the firm “had too many assets on FTX.”
Multicoin Writes Down Assets in FTX
There exists a possibility of recovering some of its assets from FTX following the bankruptcy proceedings.
However, Multicoin Capital is writing them down to zero until that time. The value of the FTX-bound assets was not disclosed but based on speculation by some market experts, it may be as high as $850 million. Apart from FTX, Multicoin Capital announced that it had equally traded on Coinbase and Binance.
“At present, the fund has no assets exposed to any other counterparties,” Multicoin added. “In the future, we anticipate some diversification of custodial exposure – with Coinbase expected to remain our primary custodian – and will resume trading with other counterparties as we continue to assess the present market fallout.”
As part of the FTX contagion, Temasek Holdings, another investor in the now-bankrupt exchange, has announced its decision to write down its investment worth $275 million on the FTX platform.
The firm is doing this irrespective of the outcome of the FTX bankruptcy proceedings. Two Decentralized Finance (DeFi) projects, Maps.me and Oxygen also have up to 95% of their funds locked in the FTX Derivatives Exchange.
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