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As far as the crypto industry is concerned, Multicoin Capital said it does not believe FTX will be the downfall of the industry.
Crypto venture capital firm, Multicoin Capital is seeing a bright future for the cryptocurrency ecosystem despite the current downturn fueled by the collapse of the FTX derivatives exchange. The venture capital firm was one of the biggest backers of the bankrupt trading outfit, and it said it was able to retrieve about a quarter of its funds lodged on the exchange, however, its trapped funds still account for 15.6% of the fund’s assets.
Multicoin said in a letter shared with its investors that it plans to mark down the funds trapped on FTX as it is all wrapped up in the bankruptcy proceedings.
“We put entirely too much trust in our relationship with FTX,” Multicoin managing partners Kyle Samani and Tushar Jain wrote in the note to investors. “We had too many assets on FTX.”
Despite the trust that Multicoin said it has for FTX, it said it trades on two other exchanges including Coinbase Global Inc (NASDAQ: COIN), and Binance Exchange. For now, the venture capital firm said it now utilizes Coinbase Custody for all of its exchange storage of assets. The rest of its assets are in self-custody wallets.
“At present, the fund has no assets exposed to any other counterparties,” Multicoin said. “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 one of the top stakeholders in the crypto industry, Multicoin is joining other FTX investors like Temasek, Sequoia Capital, and Softbank that have marked down their investments in the trading firm. That the assets have been marked down does not imply efforts are not being put into recovering the assets alongside other creditors.
Multicoin on the Future of the Crypto Industry
According to Multicoin, it said it holds a very substantial amount of Solana (SOL) which has also seen a massive beating based on the fact that Sam Bankman-Fried and Alameda Research are the biggest proponents of the coin.
Despite the more than 40% loss it has received since the FTX implosion became publicized, Multicoin said it still believes in the potential of the coin because it has one of the best developer communities in the crypto ecosystem. The venture capital firm is hopeful the coin is going to grow back as it does not believe in selling assets when the market is bearish.
As far as the crypto industry is concerned, Multicoin Capital said it does not believe FTX will be the downfall of the industry and that it will continue fighting like every well-meaning stakeholder in the industry.
“As the leverage gets cleared out of the system, we expect to see green shoots next year,” the letter 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.”