According to a copy of Multicoin Capital‘s annual investor letter, the company posted a 91.4% loss for its hedge fund in 2022. The collapse of the FTX crypto exchange is blamed for this loss in the letter.
According to Letter Multicoin Capital Made Huge Losses in 2022
The company informed investors of the hedge fund’s decline in a different letter last November. In the letter, the company also stated that 10% of the fund’s assets were trapped on FTX and that tokens such as FTT, SOL, and SRM were also affected by the decline.
The hedge fund was up 1,376% after deducting fees. Until 2022, this increase yielded a return of 100.9% in January 2023. This brings the total return since the fund’s inception to 2.866%. However, this coincided with the market’s recovery from 2022’s lows.
About the Letter
The letter summarizes Multicon’s strategies to reduce counterparty risks. For example, for derivatives contracts, the company has changed its collateral management methods to reduce the amount of collateral held on exchanges. It has also decided to hire new custodians to improve custody risk diversification.
“While the fund successfully dodged the catastrophic implosions of LUNA and Three Arrows Capital earlier in the year, we didn’t avoid the explosive revelations about FTX nor the subsequent contagion that spread across the market. After a remarkable year in 2021, our performance in 2022 was the worst since inception.”
Excerpt from the letter
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