California-based crypto hedge fund Ikigai is one of the companies publicly owning up to losing a “large majority” of its assets on the bankrupted crypto exchange FTX.
Travis Kling, founder and chief investment officer of the asset management firm, tweeted on Nov. 14 to his 90,000 followers, “Unfortunately, I have some pretty bad news to share. Last week Ikigai was caught up in the FTX collapse. We had a large majority of the hedge fund’s total assets on FTX. By the time we went to withdraw Monday mrng, we got very little out. We’re now stuck alongside everyone else.”
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Ikigai was founded in 2018 and raised $30 million from 275 investors around the world to start a new venture fund in May 2022.
Kling accepted responsibility for losing investors’ money, tweeting, “It was entirely my fault and not anyone else’s. I lost my investors’ money after they put faith in me to manage risk and I am truly sorry for that. I have publicly endorsed FTX many times and I am truly sorry for that. I was wrong.”
However, Kling also railed against the sociopaths, bad actors, and lack of accountability in the crypto space.
“It’s obvious now that the space has not done enough to identify and expel bad actors. We’re letting way too many sociopaths get way too powerful and then we all pay the price. If Ikigai continues on, we pledge to fight harder in this regard. It’s a fight worth fighting.”
Many industry participants have shown support to the Ikigai team, Blockworks reported.
David Packham, co-founder and CEO at ChintaiNetworkresponded to Kling in a tweet: “Your only real mistake was trusting a firm backed by huge funds and regulated in a region was not a fundamental dishonest bad actor committing mass fraud.”
Others were less sympathetic. United4USMNT tweeted, “You shouldn’t receive one dime. You opted to put your money in an unregulated entity. Sorry boo. That is the game you play. Crypto geniuses espoused the brilliance of no regulation. Well, you get to downsides too.”
The Ikigai hedge fund is deciding whether to continue running the firm or begin winding down operations, Kling said. There is no timeline for potential recovery of funds.
Kling tweeted about the scope of the fraud and his disappointment in the industry, saying it’s “hard for me to imagine the space bouncing back quickly from this ordeal.”
Others on Twitter echoed his thoughts. “This whole industry is so toxic now. We need regulation. I hate it but that’s the only path forward” Crypto Cat (Rocky) tweeted. “It’ll hurt worse the longer it goes on being a home for those with no morals, ethics or desire to do anything it takes to make a buck. A sad commentary indeed.”
Other crypto firms have declared losing assets on FTX include Genesis Trading, CoinShares, Galaxy Digital, Wintermute, Crypto.com, Matrixport, and hedge fund Galois Capital, Yahoo!Finance reported.
Crypto lender BlockFi, which was bailed out during the summer by FTX with a $400 million line of credit, made a public update Monday: “The rumors that a majority of BlockFi assets are custodied at FTX are false. That said, we do have significant exposure to FTX and associated corporate entities that encompasses obligations owed to us by Alameda, assets held at FTX.com, and undrawn amounts from our credit line with FTX.US.”