By
Bhushan Akolkar
April 30th, 2024
According to Pantera Capital, it had no LUNA investments at the time of the UST crash, and made a substantial profit from its early exit.
Pantera Capital has said that it did not suffer substantial losses due to the recent UST crash. The American hedge fund backing Terra Labs disclosed that it had cashed out around 80% of its investment before the controversial stablecoin plunged dramatically. In fact, the crypto venture capital firm claims it made a massive profit from its Terra (LUNA) investment. Partner at Pantera Capital, Paul Veradittakit, revealed that the firm generated around $170 million from $1.7 million owing to its early exit.
Commenting on the exit, Joey Krug, co-chief investment officer at Pantera Capital, explained in a media session:
“The market has been fairly frothy over the last year and thus we’d exited the majority of our position before any of this happened. Roughly 80% over the last year, fairly gradually over time.”
Meanwhile, other venture firms that backed Terra Labs suffered monumental losses following the UST-induced LUNA crash. The Terra native token is currently trading at less than a cent, from more than $80 earlier this month.
Krug also clarified that Pantera’s LUNA investments were separate from its investments in Terraform Labs. According to the co-CIO, the LUNA investments took place in July 2020 when the coin hit the public market. Krug also explained that the investments happened through liquid trading vehicles. This is a departure from the venture-style investments Pantera most likely deployed for its direct investments in Terra Labs itself.
Pantera Capital Been Investing in UST & LUNA Creator Since Early 2021
Pantera Capital is one of the high-profile backers of UST and LUNA creator Terraform Labs. So far, the crypto-specializing hedge fund has invested at least twice in Terra Labs. The first instance was during the latter’s $25 million funding round back in late January of 2021. That exercise also saw investor participation from Galaxy Digital and Coinbase Ventures, to name a few. In an issued statement, Terra Labs said it intends to channel the new funds toward building new DeFi projects. Furthermore, the UST creator also wants to extend interoperability to more blockchains.
The second time Pantera Capital financially backed Terra Labs was in July 2021, joining the UST creator’s $150 million ecosystem funding round. The round also saw action from several notable venture capital and financial services platforms. Participants include Arrington Capital, BlockTower Capital, Delphi Digital, Galaxy Digital, Hashed, Lightspeed Ventures, Parafi Capital, and SkyVision Capital.
On why Pantera began actively investing directly in Terra Labs following its initial LUNA direct investment a year earlier, Krug tweeted:
“We managed [the LUNA] position down over time as it became increasingly profitable/large, in order to maintain a diversified portfolio. We initially invested in LUNA because of the progress we saw in developer adoption, the payments usage, and the broader ecosystem being built on Terra.”
Following the LUNA and UST crash, the Terra Labs legal team has silently resigned.