CoinShares remains afloat despite heavy FTX losses: Q4 report

While other hedge funds decided to close operations after being hit by the FTX debacle, some managed to survive and stay afloat after navigating the challenges brought about by the collapse of the exchange.

In its fourth-quarter report for 2022, institutional crypto fund manager CoinShares highlighted the firm remained “financially robust” despite dealing with the FTX collapse at the end of the year. The fund also presented its wins, such as its graduation to Nasdaq Stockholm’s primary market and strong levels of inflow into CoinShares physical exchange traded 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 said over $31 million of assets were stuck in the FTX exchange following its bankruptcy declaration. The fund manager remains unsure if they will ever be able to recover the funds or how much of the assets can be recovered.

During the quarter, the firm also made the decision to wind down its CoinShares consumer platform. The firm wrote:

“Market conditions gave rise to a situation that did not allow us, with our existing capital structure, to support a consumer activity that required significant upfront investment in marketing.”

CoinShares CEO Jean-Marie Mognetti also wrote that FTX’s bankruptcy “had a significant impact” on the firm’s capacity to deploy its algorithmic trading platform, HAL, in Europe. Despite this, Mognetti also wrote that the firm would move into 2023 with clear goals, such as focusing on expanding its digital asset management business and institutional offerings.

While CoinShares managed to weather the FTX storm, hedge fund Galois Capital was not as lucky. On Feb. 20, the fund told investors that it was shutting down its operations because of the losses incurred by the FTX collapse. The firm decided to give back its remaining funds to its investors and sell off its claims to buyers more capable of pursuing bankruptcy claims.