“We put entirely too much trust in our relationship with FTX,” Multicoin managing partners Kyle Samani and Tushar Jain wrote in the 3,400-plus word letter, which CNBC obtained. “We had too many assets on FTX.”

In a letter last week, the firm said it was able to retrieve about one-quarter of its assets from FTX, but the money still stranded there represented 15.6% of the fund’s assets. Multicoin also said at the time that it had traded on three exchanges: FTX, Coinbase and Binance. Now, 100% of its assets “outside of the capital stuck on FTX” is on Coinbase or in self-custody wallets.

“At present, the fund has no assets exposed to any other counterparties,” Multicoin said. “In the future, we anticipate some diversification of custodial exposure – with Coinbase expected to remain our primary custodian – and will resume trading with other counterparties as we continue to assess the present market fallout.”

John Robert Reed, a Multicoin spokesperson, declined to provide a comment for this story.

Multicoin said it doesn’t expect the crypto market to turn anytime soon. That’s because there are more collapses ahead that will result from the sudden failure of FTX and sister hedge fund Alameda Research, which were both owned by Sam Bankman-Fried. Both entities entered bankruptcy proceedings on Friday.

“We expect to see contagion fallout from FTX/Alameda over the next few weeks,” the letter said. “Many trading firms will be wiped out and shut down, which will put pressure on liquidity and volume throughout the crypto ecosystem. We have seen several announcements already on this front, but expect to see more.”

As other companies with assets tied to FTX seek to raise emergency funds, “we are looking to buy dislocated assets at attractive valuations,” Multicoin added.

Multicoin took another big hit with FTX’s failure because of its hefty position in the Solana token. Bankman-Fried was a big booster of Solana, and Alameda was a major holder of the coins. That association has led to a 64% plunge in the value of Solana in the past 12 days.

Multicoin said it’s holding its position and still believes in Solana, in part because the cryptocurrency has “one of the most vibrant developer communities.” The crypto market has experienced multiple pullbacks in the last few years and has bounced back.

“Based on our experience in 2018 and 2020, we learned that it’s not prudent to sell an asset during a short-lived crisis if the core thesis is not impaired,” the firm said.

Multicoin concluded by saying that just as Lehman Brothers didn’t kill banking and Enron wasn’t the death of energy companies, “FTX won’t be the end of the crypto industry.”

“As the leverage gets cleared out of the system, we expect to see green shoots next year,” the letter said. “We know that the builders in this industry and in our portfolio are some of the most dedicated people and they will not give up. And neither will we.”

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