In 2021, Binance, the largest crypto exchange in the crypto sector, purchased stakes in the crypto hedge firm Multicoin. However, this investment has raised questions in the Twitter crypto community after the exchange’s dealing with FTX.
Multicoin Assets Frozen After FTX Bankruptcy Filing
The FTX saga is among the most famous crypto exchange meltdown in the crypto industry. Changpeng Zhao, the CEO of Binance, released some tweets last year before FTX’s collapse.
Meanwhile, reports revealed that Multicoin, a VC firm took part in a funding round for FTX early last year. On January 26th, the firm invested over $835 million in a Series A fundraising round for FTX.US.
Due to the substantial amount of money the venture capital firm had invested in FTX, its funds were immediately frozen after FTX filed for bankruptcy. The company joined a list of others like Sequoia, who invested millions in the exchange.
In 2021, Binance’s VC arm, Binance Labs, invested in the crypto hedge fund. According to reports, Binance’s stake in the company was profit-oriented.
The largest crypto exchange was hoping to recover part of its losses in the market. At the time, Zhao said Multicoin had an eye for identifying good crypto projects.
“Multicoin has an impressive history of success. Their expertise in their field is unparalleled, and we are pleased to partner with them,” the CEO said.
Binance Loses Investment In Both FTX And Multicoin
Binance’s stake in Multicoin adds it to a list of other firms, such as Rabbit Capital and Union Square Ventures, who had invested in the hedge fund. Similarly, Marc Andreessen, a famous American investor, had also invested in Multicoin.
Last November, Multicoin lost over 50% of its capital in less than 14 days. According to reports, the crypto hedge fund had a massive stake in FTX.
Following FTX’s demise, the company lost 55% of its valuation. Surprisingly, FTX wasn’t Multicoin’s sole crypto investment.
Other than FTX, the crypto hedge fund invested in crypto-based firms like Solana. The FTX crisis also affected Solana as the price of the Solana token dropped, hitting new lows.
Binance, a significant shareholder and partner of Multicoin, probably had more exposure to the situation than the $500 million in FTT tokens that the exchange held prior to the issue.