The cryptocurrency market continues to leak lower as the crypto winter is being hit with the combination of an ice storm and a deep freeze following the implosion of FTX which is creating a solvency and liquidity crisis.

FTX was at the center of a web and its fallout continues to have ripple effects with the most prominent being Genesis which is seeking $1 billion in order to remain solvent. Issues like this are also leading many of those invested in crypto to pull their money out which is also adding to the chaos, especially with companies that used deposits to make investments or staked defi projects for yield.

Crypto VC firm Multicoin Capital agrees with this dire assessment of the crypto market and is warning that the fallout from FTX could lead to many trading firms being wiped out soon. The hedge fund had been noted for its strong performance during the bull market and has seen a 55% drawdown this month.

Prior to the bear market, Multicoin had been one of the best-performing funds and had just raised a new $430 million fund in July. The company also lost a portion of funds due to the FTX collapse, but think there's some chance of recovery. It also acknowledged making a mistake by having too much trust in FTX and too many assets on the platform.

Overall, the company lost about 15.6% of its assets. Following the collapse, the company shifted all its assets to Coinbase (COIN  ) from Binance. It said that there's no counterparty risk at the moment, and the fund expects to continue looking to diversify its custodial exposure.

Multicoin is not in any rush to deploy capital as it sees more contagion spreading with the potential collapse of other trading firms. It does believe that this will create an opportunity to buy high-quality assets at attractive prices.

However, the company reiterated its investor letter by reiterating that the collapse of FTX doesn't impair its core thesis around long-term growth and adoption of cryptocurrencies. In fact, it continues to hold onto its solana position which is down more than 60% in the last 2 weeks as it believes in its long-term potential and vibrant developer community.