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Multicoin Expects FTX Contagion Risks For Weeks To Come


In a letter to its buyers, one of many business’s most notable crypto enterprise companies, Multcoin Capital, has revealed its thesis for the approaching weeks.

Managing companions Kyle Samani and Tushar Jain write in a 3,400-word letter that the FTX fiasco doesn’t spell doom for the crypto business, as critics like Peter Schiff and Nassim Taleb just lately did.

“Simply as Lehman Brothers didn’t kill banking and Enron wasn’t the dying of power corporations, FTX received’t be the top of the crypto business,” the enterprise capital agency stated.

On the identical time, the agency warns its buyers that FTX’s collapse will trigger extra fallouts. Samani and Tushar wrote:

We count on to see contagion fallout from FTX/Alameda over the subsequent few weeks.

Many buying and selling companies will probably be worn out and shut down, which can put strain on liquidity and quantity all through the crypto ecosystem. We’ve got seen a number of bulletins already on this entrance, however count on to see extra.

In line with Multicoin, leverage should first be faraway from the system earlier than there will probably be “inexperienced shoots subsequent yr.”

Multicoin Trusted FTX

Samani’s firm additionally acknowledged its personal errors, although. Thus, it had positioned “an excessive amount of belief” in FTX. In consequence, Multicoin misplaced 15.6% of its complete fund belongings on FTX.

The enterprise agency was solely capable of get better a couple of quarter of its funds that have been deposited on the trade. Though ready to see how the chapter proceedings progress, the corporate expects to put in writing down its funding in FTX to zero.

In doing so, Multicoin follows the destiny of different buyers in FTX, comparable to Temasek, Sequoia Capital and Softbank.

As a result of lack of confidence, Multicoin stated it’s only buying and selling on two different exchanges, Coinbase and Binance. For now, nonetheless, the corporate solely depends on Coinbase custody and self-managed chilly wallets, it stated.

The Future Of Solana (SOL)

By its personal account, Multicoin has invested a big quantity in Solana (SOL). The token was one of many largest victims within the FTX collapse, as SOL was one among FTX’s largest positions together with FTT.

On November 05, SOL was nonetheless buying and selling at a value of $38.71 on Binance earlier than the steep crash to at the moment $13.53 occurred.

SOL USD 2022-11-18
SOL noticed an unprecedented drop following the primary FTX rumors. Supply: TradingView

Regardless of the heavy losses, Multicoin formally nonetheless believes in Solana’s long-term potential, in accordance with its letter to buyers. The enterprise agency stated it’s holding its place and nonetheless expects a vivid future for Solana, as a result of the cryptocurrency has “probably the most vibrant developer communities.”

Based mostly on our expertise in 2018 and 2020, we realized that it’s not prudent to promote an asset throughout a short-lived disaster if the core thesis isn’t impaired,” the letter states.

Nonetheless, there’s a juicy (unconfirmed) rumor circulating that Samani and Jain dealt with his private funds in a different way. Allegedly, the overall companions offered their private SOL stashes close to the highest.



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