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Investing.com – Despite more than 10 days of a saga that holds daily twists and turns, the fallout from the FTX crypto platform bankruptcy case is not yet over, according to a key player in the digital asset industry .
Venture capital firm Multicoin Capital sent a letter to investors yesterday warning that the collapse of FTX and falling cryptocurrency prices have caused the fund to drop 55% this month, while warning that the situation could get worse before it gets better, eventually. “We have put far too much faith in our relationship with FTX,” wrote Multicoin managing partners Kyle Samani and Tushar Jain. “We had too many assets on FTX” they added.
Multicoin also said that now 100% of its assets “outside of FTX locked capital” are on Coinbase (NASDAQ:) or in secure wallets.
“Currently, the fund has no assets exposed to other counterparties,” says Multicoin. “Going forward, we expect some diversification of custody exposure – with Coinbase expected to remain our primary custodian – and we will resume trading with other counterparties as we continue to assess current market fallout.”
Indeed, Multicoin believes that the collateral damage of FTX’s bankruptcy is not yet fully known.
“We expect contagion fallout from FTX/Alameda over the coming weeks,” the letter said, predicting that “many trading firms will be wiped out and shut down, putting pressure on liquidity and volume across the board.” We’ve seen several announcements on this front already, but expect to see more.
“However, Multicoin remains confident regarding the longer-term future of the crypto market:
“Based on our experience in 2018 and 2020, we have learned that it is not prudent to sell an asset during a short-lived crisis if the basic thesis is not impaired,” the statement said. society.
Multicoin also mentioned the case of Lehman Brothers, whose bankruptcy led to the financial crisis of 2008, but which did not kill the banking sector, and that of Enron, whose disappearance did not lead to the death of companies. of energy.
Multicoin thus concluded that “FTX will not be the end of the crypto industry.” “As leverage is eliminated from the system, we expect to see green shoots next year,” indicates the letter.