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Cryptocurrency-focused asset manager Multicoin Capital lost more than half of its flagship fund’s capital in about two weeks.

The roughly 55% drop – one of the worst in Multicoin’s history – was triggered by FTX’s rapid slide into insolvency, according to three sources familiar with the matter.

The figure excludes illiquid and side-pocketed investments. The steep drop reflects the 9.7% of fund assets, including derivatives, that were held by FTX.

Multicoin, one of the biggest and oldest investment managers in the industry – and often considered one of the savviest – would like to reduce all of its FTX positions to zero for the time being, with the final word going to the fund’s auditors and administrators.

This decision partly explains the vertiginous fall of 55% in just over half a month. But that doesn’t explain all of the slowdown.

Multicoin, however, has no plans to go out of business, shut down its flagship vehicle, or convert to a proprietary business operation, sources said. It is also introducing a number of operational and infrastructure improvements, including efforts to mitigate counterparty risk.

Other factors behind the losses, sources say: a long-standing bullish thesis on Solana’s native token $SOL (once-bullish $SOL backers sold off in light of the role of Sam Bankman-Fried in the early days of the proof-of-stake protocol); Solana-based assets, including Mango, where FTX was the only US counterparty available; interests in FTX.US; and outstanding derivative contracts.

It could have been worse.

As of November 6, Multicoin retained around 13% of the vehicle’s assets on FTX. The company in no time – with repeated follow-ups in the days that followed – issued a series of withdrawal requests to FTX. Not all redemptions have been meetAs many of the asset manager peers.

Fortunatenote and The block previously reported Multicoin’s updated figure of 9.7% for frozen funds, not that the company started with around 13%.

A spokesperson for Multicoin – led by managing partners Kyle Samani and Tushar Jain – declined to comment. The sources were granted anonymity to discuss sensitive business transactions.

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  • Michael Bodley

    Chief Editor

    Michael Bodley is a New York-based editor for Blockworks, where he focuses on the intersection of Wall Street and digital assets. He previously worked for the institutional investor newsletter Hedge Fund Alert. His work has appeared in The Boston Globe, NBC News, The San Francisco Chronicle and The Washington Post. Contact Michael by email at [email protected]

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