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Venture Capital: Pantera successfully exits at the peak, Galaxy Digital CEO: LUNA tattoo will remind me to stay humble

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Venture Capital: Pantera successfully exits at the peak, Galaxy Digital CEO: LUNA tattoo will remind me to stay humble

The collapse of Terra not only affected retail investors, but also caught the attention of venture capital firm Galaxy Digital's founder, who discussed the collapse of LUNA and UST in a letter to shareholders, stating that they will no longer be involved with algorithmic stablecoins; Pantera, on the other hand, emphasized that they had gradually liquidated 80% of their LUNA holdings last year.

First Statement After the Crash

Galaxy Digital CEO Mike Novogratz spoke for the first time since the market crash on 5/8, addressing the collapse of LUNA and UST in a letter to shareholders and the crypto community, focusing on the aftermath and review.

He began by discussing the macro perspective, highlighting that not only crypto assets but also growth stocks with negative cash flow have dropped by 50-70%, core assets like BTC and ETH have fallen by around 58% from their historical highs, and competitor coins have dropped by 80%.

The unprecedented monetary policy has led to the most severe inflation since the 1970s, causing a significant correction in assets that surged post-pandemic. He pointed out the catastrophic collapse of Terra:

The Terra collapse was a result of the downward trend in reserve assets and the withdrawal of UST, triggering pressures similar to a "bank run," indicating that the UST reserves were not prepared to prevent such a collapse.

He emphasized that Galaxy had adhered to the following points in its investment in LUNA and would continue to strengthen these core principles, especially in crypto investments:

1. Maintain portfolio diversification
2. Take profits on the way up
3. Have a risk management framework
4. Understand that all investments are influenced by macro factors

In conclusion, he stated:

In hindsight, things always seem clearer. My tattoo will remind me that humility is required in venture capital.

Novogratz referred to his LUNA tattoo inked on 1/5 this year, highlighting that Galaxy had recently provided an update, stating they would no longer engage with algorithmic stablecoins. The diversified investment portfolio and solid capital base of Galaxy have prepared them for the long term.

Pantera Profits 100x by Selling at the Peak

Joey Krug, the investment chief at venture capital firm Pantera, told The Block that they had cashed out nearly 80% of their LUNA holdings before the UST crash, claiming to have closed most positions last year. Pantera had three rounds of investments in Terraform Labs:

  • 2020 Q3 | Public market purchase of LUNA
  • 2021/01 | $25 million
  • 2021/07 | $150 million

Joey Krug stated:

As time passed, profits from the Terra investment grew, and as the scale increased, we managed to reduce our exposure to maintain a diversified investment portfolio. When LUNA crashed, the remaining 20% of the position was sold at an average price of $25.6, with about 2/3 of it sold, while the rest was unable to be sold due to staking.

Paul Veradittakit, a partner at Pantera, also mentioned that by exiting early, they cashed out about $1.7 billion from an initial investment of approximately $1.7 million.

Note: Pantera's claims have not been verified.