Brazilian manager Giant Steps Capital announced on Wednesday (4) that it is closing the Giant Satoshi cryptocurrency fund, which until then was touted as “the first fund in Brazil seeking to outperform Bitcoin.”
As the company described in an email it sent to clients, the decision to end the product on January 25 was due to the mistrust in the cryptocurrency market that intensified after the downfall of the FTX brokerage.
Giant Satoshi ran client funds in the derivatives market within FTX and had the equivalent of 16 bitcoins in the brokerage, according to data from the Securities Commission (CVM). However, she claims that she did not lose money on FTX by withdrawing it before the crash.
“From the sale of all FTX assets, we transferred the entirety of the fund’s assets to our primary custodian and retained 100% of the fund’s purchased bitcoin portfolio while we determined next steps,” the company contextualized in the email.
The final decision, as we have now seen, was to permanently terminate the Giant Satoshi Fund: “Recent events involving FTX reveal massive institutional insecurity that continues to permeate the cryptocurrency ecosystem as a whole, with consequences that remain unknown.”
Giant Steps claims that to run its crypto fund strategy, it has relied on using derivatives only available through exchanges. With FTX in ruins, the principal found that other platforms operating in this space did not meet due diligence standards, and did not have the desired policies and technology infrastructure. “So we are uncomfortable working with them,” says the manager when he sees the continuation of the Giant Satoshi Fund as futile.
Fund exposure to FTX
As of July this year, 11.9% of the net worth of Giant Steps’ flagship crypto fund, Giant Satoshi II Master, was in bitcoin held on FTX. This percentage was the equivalent of 16 BTCs, quoted at R$2 million at the time.
It is estimated that at least 636 contributors were exposed to Giant Satoshi II Master, because it served as a reference for two other products: Giant Satoshi Crypto Advisory, the group’s most popular crypto fund, which targets XP clients, is also a partner. Giant Steps Investor. and Giant Satoshi Crypto, offered to investors from other exchanges.
When FTX collapsed in November, there was market speculation that a Brazilian asset manager might have been affected. After all, the July data showing exposure to FTX was the most recent data available for consultation at CVM, as the company used legal maneuvering to hide the August, September and October reports from the general public.
Asked about this at the time, the Giant Steps team confirmed that it had not incurred any loss in FTX: “Giant FTX used to run a smaller portion of the spot and futures trades in Satoshi’s fund portfolio, positions that were sold in their entirety, with no recognition of losses.” “.
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