FTX Bankruptcy Will Have Devastating Effects On Crypto Firms – Prominent VC Says
Multicoin, one of the largest cryptocurrency venture firms, alerted investors on Thursday, the 17th of November, about the likelihood of the demise of many crypto trading firms as a result of the fall of FTX.
Many Trading Firms To Close Down
Following the collapse of FTX, one of the biggest crypto exchanges, earlier this month, there have been a number of opinions and assessments flying about on the internet.
Yesterday, the 17th of November 2022, Multicoin, a leading venture firm in the crypto industry, released a letter alerting crypto investors of the consequences of the big fall of FTX.
In total, Multicoin Capital has lost about 55% of its fund. This is largely due to FTX’s collapse. Although there is a potential that Multicoin will be able to recoup some of the funds with FTX. However, given that they are currently subject to bankruptcy procedures, they will naturally be written off as being worthless.
According to the managing partners, Kyle Samani and Tushar Jain, they admitted that they had placed too much trust in FTX and that FTX was overloaded with a really large percentage of the company’s assets.
Multicoin stated in the letter that it expects that the current deplorable state of the crypto market will remain as it is for a while owing to the quite big damage done by the demise of FTX and its affiliate, Alameda, which both belonged to Sam Bankman-Fried.
Although, since the unfortunate incident, there have been a couple of announcements from trading affirms announcing closure, the letter predicts that even more will come, and according to it, the resulting effect on the crypto ecosystem will be quite disastrous.
It can be deduced from the words of the letter that Multicoin expects that the turnout of events will put a strain on liquidity and volume across the crypto space.
Multicoin Capital Braces for a Fatal Loss.
Trying to recover from the losses suffered, Multicoin announced in the said letter that it wants to purchase distressed assets at attractive prices.
Also, the company will retain its Solana position taken earlier and continue to believe in the Solana Crypto.
According to the letter, past events and experience have proven that it is unwise to sell off an asset due to a temporary setback if the underlying premise has not been compromised.
Also, the letter states that Multicoin believes that this is not the end of crypto, but everyone should get ready for a long ride.
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