Delphi Digital discloses loss of $10 million investment after Terra collapse

Delphi Digital, a large investment fund supporting Terra (LUNA), announced its losses after the collapse of LUNA-UST. At their peak, Terra-affiliated tokens accounted for 13% of Delphi’s assets under management, while Hashed appears to have lost over $3.5 billion.

The demise of the Terra ecosystem’s tokens, stablecoin TerraUSD (UST) and Luna (LUNA), has prompted some major investors to come clean and detail their losses. After Three Arrows Capital, Binance, Galaxy Digital, and Pantera Capital, it’s the turn of another investment fund that has invested money in the Terra project (LUNA), Delphi Digital, to review what has happened in the past few days.

Delphi Digital claims Terra’s stablecoin UST has been caught in a “death spiral,” wiping $40 billion off the capitalization of both UST and LUNA coins. While it is unclear whether the cause of the crash was due to the LUNA-UST model being hacked or simply massive withdrawals from users, the investment fund called it the most severe disaster to hit the crypto market since the hack exchange Mt. Gox.

“We always knew something like this was possible, and we tried to stress the risks to a system like this in our research and public commentary, but the fact is we miscalculated the risk of a “death spiral” event coming to fruition. We’ve taken some heat for this over the last week, and we deserve it. The criticism is fair and we accept it,” the firm wrote.

According to the firm, Delphi Ventures Master Fund purchased a small amount of LUNA in Q1/2021, worth 0.5% of its net asset value (NAV) at the time. That position grew as the fund’s holdings grew, including a $10 million investment in the LFG’s February 2022 raise, which is now worthless.

The fund claims that at the time LUNA peaked in early April, the value of investments in LUNA as well as the Terra ecosystem accounted for only 13% of total assets. Delphi Ventures confirmed that it had not sold any LUNA in the past. However, they also do not disclose the full amount of LUNA accumulated since 2021.

Meanwhile, the fund’s research unit, Delphi Research, has published 6 in-depth reports on the Terra ecosystem in the past. Delphi writes that most of the reports mention the risk of UST being de-peg and deny having edited the studies after the project collapsed. They will also keep the reports intact for the community to see and comment on.

Hashed, an early-stage venture fund based in Seoul, South Korea, is another significant Terra backer. According to Crunchbase data, the company participated in Terra’s 2021 venture round, where it helped raise $25 million. Hashed’s losses amount to over $3.5 billion using pricing data from early April.

Similar to Delphi, cryptocurrency exchange Binance also announced that it lost all of its $3 million invested in LUNA in 2018. At the time LUNA’s price peaked, its 15 million LUNA spot was worth up to $1.6 billion, but now it’s less than $3,000.

Other funds such as Three Arrows Capital, Galaxy Digital, and Pantera Capital all acknowledged that the LUNA-UST model had collapsed but confirmed that they were all “out of stock” in time and did not suffer any damage.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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