Investor letter: Multicoin's hedge fund had a 91.4% loss in 2022; in November, Multicoin revealed an FTT position and that 10% of its assets were stuck on FTX
CoinDeskTracy Wang
Context & Ripple Effects
Multicoin Capital built its reputation as a concentrated crypto trader: a $100M fund that beat bitcoin between 2017 and 2019 and later drew backing from Marc Andreessen and David Sacks. The new investor letter closes that arc — a 91.4% loss for 2022, with November disclosures showing 10% of fund assets frozen on FTX and open positions in the exchange's own FTT token alongside SOL and SRM.
The letter lands two weeks after Galois Capital, another fund caught with assets on the exchange, returned money to investors and liquidated its FTX claims. Multicoin's disclosures now read against that precedent: one firm chose wind-down, the other is reporting through the damage.
First-order effects
Multicoin's limited partners are absorbing a near-total drawdown driven by both market losses and custody failure — roughly a tenth of fund assets were inaccessible on FTX when the position froze in November.
The FTT position disclosed in November ties part of the fund's performance directly to the collapsed exchange's native token, compounding the SOL and SRM exposure already on the books.
Second-order effects
Prospective limited partners evaluating crypto hedge funds will price counterparty risk the way Galois's fate taught them to — where claims trade far below par — making exchange concentration a fundraising liability for any manager still holding tokens like FTT or SRM tied to insolvent venues.
Third-order effects
If the pattern holds, crypto fund structures shift toward self-custody or capped per-venue exposure, with disclosure letters expected to itemize exchange balances and native-token positions rather than report blended returns alone.
The trend: The FTX collapse is forcing crypto hedge funds to treat exchange custody and venue-native tokens as the dominant risk factor, deciding between wind-down and survival-through-disclosure.
SCOOP: @Multicoincap's hedge fund lost 91.4% in 2022, according to the firm's annual letter to investors. The firm took steps to “mitigate counterparty risks” and set up a side pocket for assets impacted by the FTX bankruptcy. @0x_tracy reports https://www.coindesk.com/...
MultiCoin Capital is now underperforming BTC since its inception in '17. Spartan Capital is pivoting into AI. Good time to get back into the market? 🤔 https://www.coindesk.com/...
down 91.4% pretty amazing so it seems the hedge fund route generates about 3% alpha since it outperforms the average retail that is down 95% https://twitter.com/...
who would have thought, a “Google Glass influencer” who teamed up with a guy who compared proof of work to a Blackberry keyboard, rekt https://twitter.com/...
This photo was literally taken at the peak of his portfolio 😂 Man was a living god for about 72 hours at Breakpoint https://twitter.com/... https://twitter.com/...
Over and over this market has shown the dumbest people in the entire world get to play with Billions of other peoples money but are absolute clowns. They have no skills or competence in markets. But this is why you can make so much too. Idiots like this losing to people like you …