Multicoin LP: Why I Want to Redeem My Investment from Multicoin?
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Multicoin LP: Why I Want to Redeem My Investment from Multicoin?
"Multicoin has always been reckless in managing its funds."
Navigating Web3 tides with focused insightsAuthor: Soldman Gachs
Translation: TechFlow
A few days ago, I attended Multicoin's monthly LP conference call. I hesitated at first about writing this piece, given that I’ve been a loyal investor in their hedge fund and venture fund for years. In the end, I decided to share my thoughts—here are the key takeaways from the call, along with my reasons for potentially redeeming my capital.
The Multicoin hedge fund is down 55% just this month. This assumes all assets held on FTX are now worthless (and frankly, given the extent of SBF’s fraud now revealed, this is close to the actual recovery value).
Approximately 10% of the fund’s assets were managed on FTX, meaning the remaining 45% loss came from other parts of their portfolio. The primary reason? Their irresponsible long position in $SOL.
I believe Multicoin has consistently acted recklessly in managing the fund. When things went wrong, they failed to act swiftly. They publicly supported SBF and FTX, and during the call, they justified their actions and decisions. Frankly, they showed little remorse for the losses incurred—honestly painful to listen to.
They claimed to be the largest investors in the fund themselves and remain committed to earning back money for investors. They stated that even after significant downsizing, the management company still maintains positive cash flow, suggesting management fees are too high and enable managers to profit regardless.
They collected substantial performance fees in prior years, which is why they are currently the biggest investors. If they chose to shut down the fund, they could walk away with those fees (which, incidentally, is industry standard).
The fund has high-water mark provisions, meaning they must recover losses before charging performance fees again—but they continue to charge monthly management fees regardless.
Finally, they shared some changes they plan to implement—specifically, pulling assets off exchanges at least every 48 hours, which should help mitigate future incidents like FTX. However, they did not address their strategy of holding irresponsible, highly concentrated positions in tokens like $SOL, which has hurt performance far more than the FTX collapse itself.
By the way, other large disclosed holdings by Multicoin: $ETH, $HNT, $MATIC, and $FIL.
The Multicoin fund’s performance has essentially tracked Solana’s trajectory, declining steadily since last November. Investors who joined before December 2021 face a two-year lock-up period, while those investing after January 2022 can redeem only 12.5% per quarter.
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