This Crypto Asset Management Firm Says ‘Large Majority’ of Funds are Stuck on FTX – Who Else Was Affected?
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The crypto asset manager Ikigai has admitted that it held “a large majority” of its assets on the now-defunct crypto exchange FTX, saying it “got very little out” before the collapse. But the company is far from only one with exposure to Sam Bankman-Fried’s once-mighty empire.
“Unfortunately, I have some pretty bad news to share,” Travis Kling, head of the crypto-focused fund opened a recent Twitter thread by telling his followers. He went on to say that Ikigai got “caught up in the FTX collapse,” and that “a large majority of the hedge fund’s total assets” were on the exchange.
“By the time we went to withdraw Monday [morning], we got very little out. We’re now stuck alongside everyone else,” Kling, a former portfolio manager from the traditional finance world, said.
Unfortunately, I have some pretty bad news to share. Last week Ikigai was caught up in the FTX collapse. We had a large majority of the hedge fund’s total assets on FTX. By the time we went to withdraw Monday mrng, we got very little out. We’re now stuck alongside everyone else.
— Travis Kling (@Travis_Kling) November 14, 2022
In the 10-tweet thread, Kling further explained that his team has been in “constant communication” with investors since Monday last week, while also taking full responsibility for the tragic outcome.
“It was entirely my fault and not anyone else’s. I lost my investors’ money after they put faith in me to manage risk and I am truly sorry for that. I have publicly endorsed FTX many times and I am truly sorry for that. I was wrong,” Kling wrote.
Finally, Kling described what, in his view, has gone so horribly wrong in the crypto industry:
“If crypto is to recover and continue on its journey to make the world a better place, I believe the entire concept of trust has to be completely rearchitected. Bitcoin is trustless. Then we built all these trusted things around it, and those things have failed catastrophically.”
Responding to the Twitter thread, several leading members of the Bitcoin and crypto community came out in support of Kling and his fund:
Really sorry to see this, Travis. Wishing you and your team all the best.
— nic carter (@nic__carter) November 14, 2022
So sorry to hear this Travis.
— Dan Held | BIP-420 (@danheld) November 14, 2022
But your communication here speaks volumes as to your maturity in handling the situation.
I wish you the best of luck.
Ikigai far from the only firm with exposure
Although Ikigai may have been among the funds that suffered the largest loss on a relative basis in the FTX collapse, it was far from the only crypto fund affected by it. Among many others, well-known companies such as CoinShares, Multicoin Capital, Amber Group, and Genesis Trading have all reported exposure to the now-bankrupt exchange.
“CoinShares confirms robust financial health and quantifies limited exposure to the FTX Exchange,” the European crypto asset manager said in a statement shortly after the FTX collapse.
1/ CoinShares confirms robust financial health and quantifies limited exposure to the FTX Exchange, while confirming that the Group has no exposure to FTX’s sister company, Alameda Research.
— CoinShares (@CoinSharesCo) November 10, 2022
XBT Provider and CoinShares Physical ETPs remain fully hedged and collateralized. pic.twitter.com/FmQHrC3g4K
Similarly, the major crypto market maker Genesis Trading also admitted exposure to FTX, saying in a tweet that their derivatives business had $175m in funds on the exchange that are now locked.
“This does not impact our market-making activities,” the firm added.
As part of our goal in providing transparency around this week’s market events, the Genesis derivatives business currently has ~$175M in locked funds in our FTX trading account. This does not impact our market-making activities.
— Genesis (@GenesisTrading) November 10, 2022
A statement was also put out by crypto trading firm Amber Group, claiming to have “no exposure to Alameda or FTT.” However, the firm did admit some exposure to the FTX exchange, saying “we still have withdrawals that have yet to be processed.”
“[…] with strict exposure limits on individual trading venues, this represents <10% of our total trading capital. It does not pose a threat to our business operations or liquidity,” Amber Group added.
7) We have no exposure to Alameda or $FTT. But similar to most trading firms, we have been an active trading participant on FTX. While we have significantly reduced our exposure over the course of the week, we still have withdrawals that have yet to be processed.
— Amber Group (@ambergroup_io) November 9, 2022
Lastly, the crypto investment fund Multicoin Capital has not published any public statement about its exposure to FTX. However, a private letter obtained by The Block reportedly shows that the firm was also impacted by FTX’s collapse, with around 10% of the Multicoin Master Fund’s total assets under management (AUM) stuck on the exchange.
“Unfortunately, we were not able to withdraw all of the Fund’s assets on FTX. Assets including BTC, ETH, and USD are pending withdrawal and represent approximately 15.6% of the assets in the Fund (excluding side pockets) and approximately 9.7% of total Fund AUM,” the letter said, according to The Block.
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