This VC firm lost $3.5B after LUNA crashed as other big money comes clean on their losses

  • Korean VC firm Hashed has claimed that it was not as badly affected by the LUNA crash, but on-chain data has shown that its losses amounted to at least $3.5 billion.
  • Other big-money investors are coming clean on their losses, including Delphi Digital which was an investor in LFG, and Mike Novogratz who even got a LUNA tattoo.

Billions of dollars were wiped out from the crypto market when LUNA and UST collapsed. And while there was a high number of retail investors who recorded considerable losses, there were also some deep-pocketed investors who lost billions, and they are now coming clean about their losses.

One of the worst-hit investors was Hashed, a South Korean early-stage venture capital firm that had backed LUNA fully. This isn’t a big surprise since LUNA was quite popular in Korea, perhaps partly because the founder Do Kwon is Korean. One local publication estimates that over 200,000 Korean investors had put their money in either LUNA or UST.

Back to Hashed – the VC firm publicly brushed off the loss it incurred from the collapse of LUNA, saying that it was still financially sound and that its fund hadn’t been hit too bad.

However, on-chain data says different. Hashed had staked 27 million LUNA, 9.7 million LUNA, and 13.2 million LUNA on the Columbus 3, 4, and 5 mainnets, the last of which launched in September last year. Using pricing data from mid-April, this loss is north of $3.5 billion.

Hashed has always stuck out its neck for Terra. In 2019, it claimed to be impressed with “the sophistication of their mechanical design and execution speed,” adding, “They’ve done a superb job executing: building product, hiring, facilitating and interacting with the community, and more.”

In addition to purchasing LUNA and UST, Hashed had also invested in Terraform Labs, the creator of the project, participating in its funding round last year where it raised $25 million. Other investors in the funding round included Galaxy Digital, the company founded and led by Mike Novogratz, Coinbase Ventures and Pantera Capital, the largest crypto fund with investments in Bitstamp, Circle, Cosmos, Polkadot, Ripple and many more.

Delphi Digital: We thought Do Kwon could stop the LUNA death spiral

Delphi Digital is yet another big-money investor that has come clean on the losses it incurred after LUNA collapsed. In a blog post, the investment and research firm revealed the extent to which it was tied to the project and how its trust in Do Kwon proved fatal.

Describing the LUNA collapse as “arguably the most catastrophic event to happen to crypto since Mt Gox,” Delphi said that its first involvement with the token was in Q1 last year when it bought a small amount. LUNA surged and the firm decided to increase its position,

But just like with Hashed, Delphi sought to dismiss the extent to which it was hit, saying that it wasn’t too invested in LUNA.

 Even at LUNA’s peak price this year, LUNA and other Terra assets made up only ~13% of NAV across Delphi Ventures. On a deal-count basis, less than 5% of Ventures’ total number of deals were in companies or protocols related to the Terra ecosystem.

Delphi’s involvement also went beyond just buying the token and in February this year, it participated in the $1 billion LUNA sale by the Luna Foundation Guard which was led by Three Arrows Capital. Delphi says it only invested $10 million at the time and that it has not yet sold any of the tokens.

Its mistake was believing that Kwon and his team could save the project in the event of a death spiral, the company said.

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.

However, unlike pure VCs, Delphi was also building on Terra. Through Delphi Labs, the company helped build a number of products on Terra including C2C lending, open-source branding, dynamic interest rate models based on control theory, and more.

Mike Novogratz has also broken his silence on LUNA. The Galaxy Digital boss was one of the biggest backers of the cryptocurrency, even getting a tattoo on his hand to show his love for the project and declaring himself a LUNAtic, as the token’s believers call themselves.

Little was the investor to know that his favorite project would crash and burn just months after he got the tattoo. And as he revealed in a letter on May 18, the tattoo “will be a constant reminder that venture investing requires humility.”

Despite coming out to own up to his mistakes, Twitter users didn’t spare the billionaire.

About Author

Steve has been a blockchain writer for four years, and a crypto enthusiast for even longer. He is most excited by the application of blockchain to solve the challenges facing developing nations.

Comments are closed.