Firinne Capital’s Statement on FTX

As events of the past week have demonstrated, the digital assets space is far from being free of idiosyncratic risk. We’re seeing the maturation of the space and survival of the fittest and best in real time. It’s not always pretty to watch, but this creative destruction is a feature, not a bug, as we evolve toward a more decentralized economy.

The Firinne Liquid Digital Assets Fund had no holdings in FTT or assets on FTX. The Fund also had no exposure to the Terra/Luna/Three Arrows Capital debacle.

Although the collapse of FTX will undoubtedly result in some backlash toward the crypto industry, it needs to be emphasized that this was a failure of Centralized Finance (CeFi), not crypto or Decentralized Finance (DeFi). DeFi on an open public blockchain should be auditable by all. If DeFi were to have an abiding aphorism, it might well be a play on another well-known slogan, “Can’t be evil.” The failure of FTX, despite being an exchange trading digital assets, is a common failure played out repeatedly in CeFi.

Recent events also highlight the fact that this space is not for casual investment approaches – it is easy to be blindsided by risks even in large, well-funded projects and tokens. The list of entities who had exposure to FTX includes some well-known names.

By diligently selecting our partners and following a thoughtful and measured investment process tempered by the discipline of using a market benchmark as a guide, we continue to strive to avoid exposure to future evolutionary failures in this market.