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In a letter to its investors, one of the most notable venture capital firms in the industry, Multcoin Capital, revealed its thesis for the coming weeks.

Managing partners Kyle Samani and Tushar Jain write in 3,400 words letter that the FTX Fiasco does not mean the end of the crypto industry, as critics like Peter Schiff and Nassim Taleb recently did.

“Just like Lehman Brothers didn’t kill banking and Enron wasn’t the death of energy companies, FTX won’t be the end of the crypto industry,” the venture capital firm said.

At the same time, the company warns its investors that the collapse of FTX will bring more fallout. Samani and Tushar wrote:

We expect to see contagion fallout from FTX/Alameda over the next few weeks.

Many trading companies will be wiped out and shut down, putting pressure on liquidity and volume across the crypto ecosystem. We’ve seen several announcements on this front already, but expect to see more.

According to Multicoin, leverage must first be removed from the system before there are “green shoots next year”.

Multicoin trusted FTX

However, Samani’s company also acknowledged its own mistakes. Thus, he had placed “too much trust” in FTX. As a result, Multicoin lost 15.6% of its total fund assets on FTX.

The venture capital firm was only able to recover about a quarter of its funds deposited on the stock exchange. Although waiting to see how the bankruptcy proceedings progress, the company plans to reduce its investment in FTX to zero.

In doing so, Multicoin is following the fate of other investors in FTX, such as Temasek, Sequoia Capital, and Softbank.

Due to the loss of trust, Multicoin said it only trades on two other exchanges, Coinbase and Binance. For now, however, the company is only relying on Coinbase custody and self-managed cold wallets, he said.

The future of Solana (SOL)

For its own account, Multicoin has invested a significant amount in Solana (SOL). The token was one of the biggest casualties of FTX’s collapse, as SOL was one of FTX’s largest positions along with FTT.

On November 05, SOL was still trading at a price of $38.71 on Binance before the hard crash to $13.53 currently.

USD SOL 2022-11-18
SOL saw an unprecedented drop following early FTX rumors. Source: TradingView

Despite the heavy losses, Multicoin still officially believes in At Solana’s long-term potential, according to its letter to investors. The venture capital firm said it stands by its position and still expects a bright future for Solana, as the cryptocurrency has “one of the most vibrant developer communities.”

Based on our experience in 2018 and 2020, we have learned that it is not prudent to sell an asset during a short-lived crisis if the basic thesis is not compromised,” the letter states.

However, a juicy rumor (unconfirmed) is circulating that Samani and Jain handled his personal funds differently. Apparently, the general partners sold their personal reserves of SOL near the top.

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