Multicoin forecasts imminent collapse of trading firms amid FTX fallout

The collapse of FTX contagion will manifest in the near term. This is stated in a statement to investors by the venture-capital firm Multicoin Capital, reports CNBC.

Many players will cease to exist, which will put pressure on liquidity in the digital-asset market. The firm said it expects to see further statements from industry participants about problems.

The leadership expressed confidence in the long-term prospects for cryptocurrencies. Just as Lehman Brothers did not kill banking, and Enron did not bring down the energy sector, “FTX will not spell the end of the industry,” the firm said.

“As leverage unwinds, we expect to see green shoots next year,” Multicoin Capital said.

Due to asset write-downs at FTX and market turbulence, the venture firm recorded a 55% impairment to NAV. The firm remains hopeful of recovering part of the funds stuck on the exchange.

“We relied too heavily on our relationship with FTX. We had too many assets there,” the letter said.

Earlier the venture firm said that its investments in the bankrupt platform amounted to 5.8% of the assets of Venture Fund III, created in July, sized at $430 million.

In the letter to investors, it states that 15.6% of the company’s assets were “stranded” in FTX. Multicoin Capital conducted operations on FTX, Coinbase and Binance. In light of recent events, the firm moved funds to non-custodial wallets and Coinbase.

Bloomberg reported that the return of funds to clients of the bankrupt exchange was deemed unlikely, with a hole in its balance sheet amounting to about $8 billion.

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