FTX Crypto Exchange Collapse WIll Delay Market Recovery

FTX Crash Meltdown Token Trading Stop Ban Bar Indonesia Exchange

Multicoin Capital, a crypto venture firm, has informed its investors that the failure of FTX and subsequent fall in prices have affected the industry negatively. It said that the FTX collapse caused a 55 percent downfall this month. Multicoin also warned that the worse is on the way before the market recovers.

The firm said there is a chance it will recover some of its funds from FTX. Since the assets are now wrapped up in bankruptcy proceedings, they might get marked below zero, reported CNBC.

Mulitcoin recently announced its third and largest fund of $430 million. It is going to be a sudden reversal of the firm.

As per a letter last week, it said that it was able to recover around one-quarter of its assets from FTX. Despite this, there remains about 15.6 percent of the stranded fund’s assets with the FTX as per the report.

Mulitcoin managing partners Kyle Samani and Tushar Jain said, “We put entirely too much trust in our relationship with FTX. We had too many assets on FTX.” Earlier, the firm traded on three different exchanges such as FTX, Coinbase, and Binance.

Currently, Multicoin’s 100 percent assets are on Coinbase and in self-custody “multi-sigs”. This amount is “aside from the capital stuck on FTX”. Multi-gigs require several signers to control funds, said the report.

Multicoin said, “At present, the fund has no assets exposed to any other counterparties. In the future, we anticipate some diversification of custodial exposure – with Coinbase expected to remain our primary custodian – and will resume trading with other counterparties as we continue to assess the present market fallout.”

The firm has also said that it does not expect the cryptocurrency market to turn anytime soon as there will be more collapses due to the sudden failure of FTX.

“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.” the letter stated.

Multicoin further mentioed, “As other companies with assets tied to FTX seek to raise emergency funds, we are looking to buy dislocated assets at attractive valuations.”

(With inputs from IANS)

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