Multicoin's letter to investors: We put too much faith in FTX, expecting more institutional explosions in the coming weeks

Having a large amount of Solana and other cryptocurrency assets in FTX's venture fund Multicoin took a heavy hit in this incident. However, they still emphasize: "Lehman Brothers did not strangle the banking industry, Enron did not lead to the demise of energy companies, and FTX will not be the end of the cryptocurrency industry."

Fund Plunges 50% in a Single Month

The cryptocurrency venture capital firm Multicoin Capital released a letter to investors on 11/17, with some content obtained by CNBC. Multicoin stated that the collapse of FTX and the downward market trend have caused the fund to plummet by 55% in a single month, and they believe the market conditions will worsen.

Overconfidence in FTX, Anticipating Investments to Zero

Multicoin mentioned the possibility of recovering some funds, but as the assets have entered bankruptcy proceedings, they have reduced their investment expectations to zero. Co-founders Kyle Samani and Tushar Jain stated:

We were completely overconfident in our relationship with FTX and held too many assets on FTX.

Multicoin is locked in assets on FTX, accounting for approximately 15.6% of the fund. Currently, all assets have been moved to Coinbase and self-custody wallets.

Market Will Not Rebound Quickly

Multicoin emphasized the impact of the sudden closure of FTX and Alameda Research:

It is expected that the impact of FTX/Alameda will continue to spread in the coming weeks, with many trading institutions facing closure, putting greater pressure on market liquidity and trading volume. We have recently seen announcements from some institutions, but expect more similar events to occur.

Remains Bullish on Solana

As more details about the FTX incident emerge, the public's understanding of how FTX supports Solana and the close relationship between the two has led to a sharp drop in the price of SOL tokens, once again impacting Multicoin, which holds a significant amount of SOL.

Multicoin still believes in Solana, as it remains one of the public chains with the most active developer community:

Based on our experiences in 2018 and 2020, we have learned that selling assets during a crisis period is not wise if the core argument remains intact. Deleveraging in the market is underway, and we expect a resurgence next year. The builders of this industry will not give up, and neither will we.