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Breaking News: Coinbase Confirms DOJ Investigation Following Major Security Incident

Multicoin Expects FTX Contagion To Hold Industry In Its Grips For Weeks To Come

Jake Simmons
Jake Simmons
2 years ago
2 mins read
bicoin FTX Multicoin

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In a letter to its investors, one of the industry’s most notable crypto venture firms, Multcoin Capital, has revealed its thesis for the coming weeks.

Managing partners Kyle Samani and Tushar Jain write in a 3,400-word letter that the FTX fiasco does not spell doom for the crypto industry, as critics like Peter Schiff and Nassim Taleb recently did.

“Just as Lehman Brothers didn’t kill banking and Enron wasn’t the death of energy companies, FTX won’t be the end of the crypto industry,” the venture capital firm said.

At the same time, the firm warns its investors that FTX’s collapse will cause more fallouts. Samani and Tushar wrote:

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.

According to Multicoin, leverage must first be removed from the system before there will be “green shoots next year.”

Multicoin Trusted FTX

Samani’s company also acknowledged its own mistakes, though. Thus, it had placed “too much trust” in FTX. As a result, Multicoin lost 15.6% of its total fund assets on FTX.

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The venture firm was only able to recover about a quarter of its funds that were deposited on the exchange. Although waiting to see how the bankruptcy proceedings progress, the company expects to write down its investment in FTX to zero.

In doing so, Multicoin follows the fate of other investors in FTX, such as Temasek, Sequoia Capital and Softbank.

Due to the loss of confidence, Multicoin said it is only trading on two other exchanges, Coinbase and Binance. For now, however, the company only relies on Coinbase custody and self-managed cold wallets, it said.

The Future Of Solana (SOL)

By its own account, Multicoin has invested a large amount in Solana (SOL). The token was one of the biggest sufferers in the FTX collapse, as SOL was one of FTX’s largest positions along with FTT.

On November 05, SOL was still trading at a price of $38.71 on Binance before the steep crash to currently $13.53 took place.

SOL USD 2022-11-18
SOL saw an unprecedented drop following the first FTX rumors. Source: TradingView

Despite the heavy losses, Multicoin officially still believes in Solana’s long-term potential, according to its letter to investors. The venture firm said it’s holding its position and still expects a bright future for Solana, because the cryptocurrency has “one of the most vibrant developer communities.”

Related Reading

Solana

Solana Buckles Under FTX Debris, Is Single-Digit SOL A Possibility?

1 year ago

Based on our experience in 2018 and 2020, we learned that it’s not prudent to sell an asset during a short-lived crisis if the core thesis is not impaired,” the letter states.

However, there is a juicy (unconfirmed) rumor circulating that Samani and Jain handled his personal funds differently. Allegedly, the general partners sold their personal SOL stashes near the top.

Unconfirmed: LP states that Multicoin GPs sold their personal SOL stashes near the top while refusing to sell for the fund and bull tweeting. They made lavish real estate and automobile purchases and have failed to return necessary $ to LPs for tax obligations.

Haters take note pic.twitter.com/uPONWcods3

— Evanss6 (@Evan_ss6) November 17, 2022

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Jake Simmons
Jake Simmons

Jake Simmons

Jake Simmons, a dedicated crypto journalist, has been passionate about Bitcoin since 2016 when he first learned about it. Through his extensive work with NewsBTC.com and Bitcoinist.com, Jake has become a trusted voice in the crypto community, guiding newcomers and seasoned enthusiasts alike towards a deeper understanding of this dynamic field.

Read more

His mission is simple yet profound: to demystify Bitcoin and cryptocurrencies and make them accessible to everyone.
With a professional career in the Bitcoin and crypto scene that began right after graduating with a degree in Information Systems in 2017, Jake has immersed himself in the industry. Jake joined the NewsBTC Group in late 2022. His educational background provides him with the technical prowess and analytical skills necessary to dissect complex topics and present them in an understandable format. Whether you are a casual reader curious about Bitcoin or an investor seeking to navigate the latest market trends, Jake’s insights offer valuable perspectives that bridge the gap between complex technology and everyday usage.

Jake is not just a reporter on technological trends; he is a firm believer in the transformative potential of Bitcoin over traditional fiat currencies. To him, the current financial system is on the brink of chaos, propelled by unchecked government actions and flawed Keynesian economic policies. Drawing from the principles of the Austrian school of economics, Jake views Bitcoin not merely as a digital asset but as a crucial step towards rectifying a failing monetary system. His libertarian views reinforce his stance that just as the church was separated from the state, so too should money be freed from governmental control.

For Jake, Bitcoin represents more than just an investment; it's a peaceful revolution. He envisions a future where Bitcoin fosters a sustainable and responsible financial framework for generations to come. His advocacy is not about opposition but about evolution, about laying the groundwork for a system that prioritizes transparency and equity over secrecy and inequality.

As a journalist, Jake’s articles are crafted with the precision of a scholar and the passion of a true believer. He provides not only news but also thoughtful analysis that connects the dots between daily developments and larger economic theories. His work is a beacon for those lost in the technical jargon often associated with crypto discussions, illuminating the practical implications and benefits of these technologies.

In summary, Jake Simmons is not just reporting on a revolution; he wants to be part of it, fully committed to enhancing public understanding and adoption of Bitcoin and cryptocurrencies. His work is more than just a collection of articles; it’s a resource, a guide, and a companion for anyone ready to explore the potential of this digital frontier. Whether you are taking your first steps into crypto or are a veteran looking to stay on top of the latest trends, Jake’s insights provide clarity and foresight in an often unpredictable industry. Join him on this journey to reshape the world of finance, one post at a time.

You can engage with his latest takes on Twitter: @realJakeSimmons.

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Disclaimer: The information found on NewsBTC is for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.

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Reason to trust

Strict editorial policy that focuses on accuracy, relevance, and impartiality
Created by industry experts and meticulously reviewed
The highest standards in reporting and publishing
How Our News is Made

Strict editorial policy that focuses on accuracy, relevance, and impartiality

Ad discliamer

Morbi pretium leo et nisl aliquam mollis. Quisque arcu lorem, ultricies quis pellentesque nec, ullamcorper eu odio.

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