Director of Portfolio Development at Pantera Capital, Franklin Bi, has created a Twitter thread discussing portfolio preventative measures taken following the recent FTX and Alameda Research fallout.
The Pantera team “assembled a virtual war room” to carry out a thorough risk assessment of their early-stage portfolio, and to establish an action plan set for immediate implementation. Their two goals were:
To identify potential risks their portfolio teams might be exposed to
To reach out to at-risk teams directly and offer assistance
Aiming to rapidly establish and carry out these two goals, Franklin emphasized that in times of crisis, “we must act and act quickly.”
Risk Assessment & Identification
Five main risks were identified, three of which were deemed urgent, according to Franklin.
The five risks were:
Counterparty risk: Outstanding credit exposure to FTX / Alameda; risk of default
Custodial risk: Holding funds in FTX accounts; risk of funds being frozen or lost
Price volatility risk: Holding certain assets, e.g., FTT, on balance sheet; risk of price exposure
Investment risk: FTX / Alameda is a direct investor; risk of liquidation in unwind or sale process
Customer risk: FTX / Alameda is a customer; risk of revenue loss
Up to 70 portfolio companies were identified as having “potentially significant [and] urgent exposure”.
The majority of this group consisted of centralized finance (CeFi) companies, decentralized finance (DeFi) protocols, and anyone who may hold tokens in their treasury. Pantera plans to continue and expand on this process over the coming weeks, and months.
Day 1 Findings
Up to 95% of the portfolio teams within the initial outreach had little to no exposure to FTX or Alameda — this was partially attributed to proactive risk management as well as custody and treasury management practices.
Two early-stage teams identified within the remaining 5% were flagged for having over 50% of funds locked on FTX, potentially impacting their runway. Pantera said it remains committed to helping the two teams explore all available options.
A further two teams have publicly disclosed their status and are receiving support from Pantera.
Ultimately, the impact on Pantera is minimal and any exposure has been resolved swiftly and smoothly.
With zero exposure to Alameda, Pantera’s FTX/FTT exposure is limited to roughly 2% of the total AUM as a result of their Blockfolio 2020 acquisition.
Franklin closed his thread by saying:
“We’re unshaken – and more importantly, we’re here to support you however we can. Our battle scars are to your benefit. Reach out to anyone on our team anytime.”
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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