While other hedge funds decided to shut down after being affected by the FTX debacle, some managed to survive and stay afloat after weathering the challenges of the cryptocurrency exchange’s collapse.
In its Q4 2022 report, institutional cryptocurrency fund manager CoinShares noted that the company remained “financially strong” despite having to deal with the FTX crash at the end of the year. The fund also posted its victories, such as its graduation on the Stockholm Nasdaq primary market and strong levels of influx into CoinShares’ exchange-traded physical products.
1/ Amidst difficult market conditions, CoinShares has remained financially robust, with strong levels of inflow into CoinShares Physical ETPs recorded in Q4. We’re proud to have graduated to Nasdaq Stockholm’s main market, a testament to the hard work and dedication of our team.
— CoinShares (@CoinSharesCo) February 21, 2023
CoinShares declared that more than $31 million in assets were locked up in FTX following its bankruptcy filing. The fund manager remains unsure if they will ever be able to recover that money or how much of the assets can be recovered.
During the quarter, the company also made the decision to shut down its CoinShares consumer platform. The company wrote:
“Market conditions created a situation that did not allow us, with our current capital structure, to support a consumer activity that required a significant initial investment in marketing.”
CoinShares CEO Jean-Marie Mognetti also wrote that FTX’s bankruptcy “had a significant impact” on the firm’s ability to roll out its algorithmic trading platform, HAL, in Europe. Despite this, Mognetti also wrote that the company would move into 2023 with clear goals, such as focusing on expanding its digital asset management business and institutional offerings.
While CoinShares managed to survive the headwinds posed by FTX, the hedge fund Galois Capital was not so lucky. On February 20, the fund told its investors that it was closing its operations due to the losses suffered from the collapse of FTX. The company decided to return its remaining funds to its investors and sell its loans to buyers better able to file bankruptcy claims.
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