Crypto Funds Hit Hard by FTX Collapse
More than a half dozen crypto funds announce signifcant expoure to FTX. The list will likely grow in coming days.
Crypto hedge funds and venture funds are announcing exposure to the collapse of FTX at an alarming rate. We are keeping track of a list of crypto funds exposed to FTX below:
List of crypto funds and estimated exposure to FTX:
Paradigm – $278 million
Sequoia Capital – $213 million
Galaxy Digital – $76.8 million
Genesis – $175 million
Pantera Capital – <3% of assets (est. $100 million exposure)
Galois Capital – $40 million
CoinShares – $30.3 million
Sino Global Capital – $3 – $8 million
Multicoin Capital – Unknown
Ikigai Asset Management – Unknown
As the largest database of crypto funds, Crypto Fund Research is in a unique position to evaluate the impact of the FTX collapse. We have over 100 crypto funds reporting monthly performance and have received dozens of updates from affected funds in the last several days. As a result, we are now able to begin to assess the potential damage.
Below are some of our takeaways from the communications we’ve received this week, or from public announcements:
– We estimate 25-40% of crypto hedge funds have some direct exposure to FTX exchanges or FTT token
– We believe the overwhelming majority of crypto fund of funds (FoF) have some direct exposure via one or more of their portfolio companies
– Average direct exposure of crypto hedge funds is around 7-12% of AUM. Some funds had only very modest exposure while others kept a majority of assets on the exchange.
– The fallout will extend even to funds not directly exposed, due to spillover effects in Solana and the cryptocurrency markets more generally
– We expect a significant portion of the affected funds to enforce gate provisions or otherwise limit/suspend redemptions temporarily
– We anticipate a record amount of investor redemption requests from crypto hedge funds in November – probably in the neighborhood of $2 billion (previous record was $1.3 billion in June 2022). However, many of these redemptions may not be issued until December, or later, depending on fund terms.
– Crypto venture funds will likely face a difficult fundraising environment over the next several months as potential investors question the due diligence of even some of the most respected venture firms.
With regard to investor redemptions and gate provisions, here is what the New York Times had to say on Friday:
Josh Gnaizda of Crypto Fund Research told DealBook that he expected many crypto-focused funds to “temporarily suspend or limit redemptions until they have clarity on whether these assets can be withdrawn, or will need to be marked to zero.”
Please direct media inquiries here