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.
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:
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.
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.
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.
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.