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Is Sino Global in a $100 Million Hole Due to FTX rout?

by upendra
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Sino Global, a prominent player in the Asian crypto investment scene, has found itself in a challenging situation due to the recent upheaval in the crypto world, primarily linked to the collapse of Sam Bankman-Fried’s FTX empire. The organization holds a substantial number of tokens that were significantly impacted by this turmoil. Moreover, FTX was a critical partner in a large fund created by Sino, which attracted capital from foreign investors.

Sino Global Capital’s recent tweet attempted to shed light on their exposure to FTX, stating that their “direct exposure to FTX exchange was constrained to mid-seven figures held in custody.” However, this statement leaves room for interpretation, raising questions about the actual extent of their exposure.

Uncovering the Details

The revelation of a presentation deck that Sino Global had shared with potential shareholders earlier this year, as part of their plan to raise up to $200 million for a crypto investment program, has intensified scrutiny. The authenticity of this slide deck has been confirmed by a reliable source.

The presentation referred to FTX as a “partner” in the fundraising effort, emphasizing the potential “substantial strategic value” FTX could provide. At the beginning of January, the fund had already amassed $90 million in assets, with FTX acting as a significant anchor investor.

Sino Global disclosed a portfolio of digital tokens valued at approximately $129 million, which included tokens like SOL (Solana platform), SRM (Serum), MAPS (Maps), OXY (Oxygen), and JET (Jet Protocol). Notably, many of these tokens were closely associated with Sam Bankman-Fried.

The Fate of Their Tokens

The recent turmoil in the crypto market, including FTX’s troubles, has led to a significant decline in the prices of these tokens, with some losing up to 80% of their value. It remains uncertain whether Sino still holds these tokens, how much the new fund currently manages, and the exact contents of the fund’s portfolio.

One concern is that liquidating these tokens could further erode their value. Due to infrequent trading, finding willing buyers at current discounted prices may prove challenging. Sara Gherghelas, a blockchain expert, pointed out the potential liquidity issue, stating, “There is not enough liquidity to sell all of the tokens,” and selling them could lead to significant price drops.

The Liquid Value Fund I

Sino Global introduced the Liquid Value I fund in late 2021, aiming to raise $200 million, marking the company’s first venture into formal fund vehicles using external funds. This move represented a shift from their previous focus on principal investments.

Aside from direct investments, Sino Global disclosed ownership shares in FTX and its U.S. subsidiary, FTX.US, valued at $6.7 million. The Liquid Value Fund I targeted high-net-worth individuals for investment.

The Connection with FTX

One noteworthy aspect of the fund’s marketing strategy was its association with FTX and Sam Bankman-Fried. FTX’s brand recognition in the United States, particularly through high-profile sponsorships with sports figures like Tom Brady, was highlighted.

However, amidst recent developments, Sino Global expressed regret for its trust in FTX, emphasizing that it continues to operate and invest as a fund. Their investments are diversified across ecosystems, and they do not engage in leveraged trading or short-term tactics.

The Uncertain Future

Despite their attempts to distance themselves from the FTX fallout, Sino Global’s strategy and operations were closely intertwined with FTX, making a swift dissociation challenging. Whether they have already liquidated some holdings or not, the returns are questionable due to earlier price drops in the crypto market.

As the crypto landscape continues to evolve, the situation surrounding Sino Global’s investments serves as a reminder of the inherent volatility and risks associated with the industry. The fate of their tokens and the broader implications for the crypto investment landscape remain uncertain, leaving stakeholders and observers closely watching developments in the months to come.

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