Franklin Bi, Director of Portfolio Development at Pantera Capital, created a Twitter thread discussing portfolio precautions taken in the wake of the recent FTX and Alameda Research impacts.
1/ The past few days have been a test for the industry.
This is an excerpt from a note to @ Pantera Capital Founder/Investor Re: Impact on our portfolio and actions taken in the first 24 hours.
We hope it helps other builders and funds move forward.
— Franklin (@FranklinBi) November 10, 2022
The Pantera team “assembled a virtual war room” to conduct a thorough risk assessment of the early stage portfolio and establish a set of action plans for immediate implementation. His two goals for them are:
- To identify potential risks to which the portfolio team may be exposed
- To contact the team at risk directly and provide assistance
Aiming to quickly establish and implement these two goals, Franklin emphasized that in times of crisis, “we must act and act quickly.”
Risk assessment and identification
According to Franklin, five main risks were identified, three of which were considered urgent.
The five risks are:
- Counterparty risk: Unpaid credit exposure to FTX/Alameda.risk of default
- Storage risk: Holding Funds in Your FTX Account; Risk of Funds Being Frozen or Lost
- Price Fluctuation Risk: Keep certain assets on the balance sheet, such as FTT.Risk of price exposure
- Investment risk: FTX/Alameda is a direct investor.Liquidation risk in the unwinding or sale process
- Customer Risk: FTX/Alameda is a customer.Risk of loss of revenue
Up to 70 portfolio companies identified as “potentially significant [and] “Emergency Exposure”.
The majority of this group consisted of centralized finance (CeFi) companies, decentralized finance (DeFi) protocols, and anyone who might hold tokens in the Treasury. Pantera plans to continue and expand this process over the coming weeks and months.
Day 1 survey results
Up to 95% of the portfolio teams that participated in the initial outreach had little or no exposure to FTX or Alameda. This was due in part to our proactive risk management and custody and treasury management practices.
Two early-stage teams identified within the remaining 5% were flagged with more than 50% of their funds locked in FTX, potentially impacting the runway. Pantera said it remains committed to helping the two teams explore all available options.
Two more teams have published their status and are supported by Pantera.
1/ Cega received 13.6 million USDC funding from Alameda. This covers 100% of Cega’s trading exposure to Alameda and yield to date. All users exposed to Alameda trading (Cruise Control, Genesis Basket, Supercharger Vault) can rest assured.
— cega 🥚 (@cega_fi) November 10, 2022
1) We’ve been through multiple market cycles in the last five years, but our focus has been and will remain the same. core pillar.
— Amber Group (@ambergroup_io) November 9, 2022
In the end, the impact on Pantera was minimal and the exposure resolved quickly and smoothly.
With zero exposure to Alameda, Pantera’s FTX/FTT exposure will be limited to approximately 2% of total AUM as a result of the Blockfolio 2020 acquisition.
Franklin closed the thread by saying:
“We are unwavering, and more importantly, we are here to support you in any way we can. Our battle wounds are to your advantage. But please contact me.”