Multicoin Capital’s hedge fund lost 91.4% in 2022, according to a copy of the firm’s annual investor letter viewed by CoinDesk.

The letter attributed last year’s decline to a turbulent year for cryptocurrencies, as well as direct and indirect impact from the collapse of crypto exchange FTX.

“While the fund successfully dodged the catastrophic implosions of LUNA and Three Arrows Capital earlier in the year, we didn’t avoid the explosive revelations about FTX nor the subsequent contagion that spread across the market,” said the letter. “After a remarkable year in 2021, our performance in 2022 was the worst since inception.”

In a separate letter to investors last November, Multicoin detailed the financial condition of its hedge fund, revealing that the fund had 10% of its assets stuck on FTX, as well as significant exposure to FTT, SOL and SRM, all tokens that saw steep sell-offs last November.

Multicoin Capital, headed by managing partner Kyle Samani, launched its hedge fund strategy in October 2017, which invests in liquid tokens. The firm also operates three venture capital funds, and has invested in the now-bankrupt exchange FTX.

Despite the massive drawdown, Multicoin’s hedge fund remains up 1,376% net of fees from its inception through 2022. As the broader crypto market rebounded from last year’s lows, Multicoin reported that the fund gained 100.9% in January 2023, bringing the fund’s inception-to-January return to 2,866%.

Multicoin’s 2022 losses stem from the assets stuck on FTX and holdings in tokens directly impacted by FTX, including the exchange token FTT. According to the letter, in November 2022, the firm quickly created a side pocket (a carveout of the main fund) for assets impacted by FTX. This included assets stuck on the exchange, which are now ensnared in bankruptcy proceedings. The side pocket also included Multicoin assets withdrawn from FTX just prior to collapse, which the letter says may be subject to clawbacks by the FTX estate.

The letter also details that Multicoin has taken new steps to “mitigate counterparty risks.” The firm will only keep 48 hours worth of trading assets on an exchange at a time, adjusted collateral management practices to reduce the amount of collateral held on exchanges for derivatives positions, and is onboarding with additional custodians to diversify custodial risk.

Multicoin says it “remains steadfast” in its long term strategy and “does not attempt to time the market.”

A spokesperson for Multicoin Capital declined to comment.