South Korean VC Firm Hashed Lost $3 Billion from Wallet in Terra LUNA Collapse

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South Korean VC firm Hashed lost more than $3 billion in LUNA collapse. As an early investor in Terraform Labs’ $25 million investment round, which took place in January 2021, Hashed made a purchase of around 30 million LUNA tokens.

Hashed CEO Simon Seojoon Kim claims that Hashed did not sell the tokens and consequently suffered a significant financial loss as a result of the fall. In an interview with Bloomberg, Kim said that the venture capital firm had suffered a loss of more than $3 billion as a result of its investment in LUNA following the crypto’s collapse in May 2022.

Hashed CEO interviewed by Bloomberg 

Hashed CEO stated in the Bloomberg interview that South Korean VC firm Hashed lost more than $3 billion in LUNA collapse. Using LUNA’s price at its all-time high of $116.11 on April 5 to determine the magnitude of the loss, it was determined that the company’s token holding would have been worth $3.6 billion had it not collapsed. As a result of the crash, the value of LUNA was reduced to a few cents.

This occurred after the TerraUSD stablecoin lost its peg. As a direct consequence of this, nearly $40 billion worth of assets belonging to investors were wiped out in the crash. Nevertheless, Kim stated unequivocally in the interview with Bloomberg that his company would keep making investments in the blockchain industry.

He said that Hashed will continue this strategy despite the recent failures that they have encountered. Kim further said: “In the tech sector, there’s no such thing as a portfolio that guarantees success, and we make our investments with that in mind. We believe in the community’s growth, and that has never changed.”

Hashed still Investing

According to what Kim told Bloomberg, South Korean VC firm Hashed lost more than $3 billion in LUNA collapse. However, he said that preparations are being made for the company to raise further funding during the first half of 2023. It is actively seeking further investment opportunities in blockchain-based gaming firms at this time.

He has high hopes that the real-world economy will become increasingly intertwined with the realm of virtual games as the development of non-fungible tokens continues to function as a connecting mechanism. To this point, Hashed has contributed a total of $320 million over two separate venture capital rounds.

In December 2020, it opened its first fund with a total of $120 million. The money was distributed to a number of blockchain firms, some of which include dYdX, Mythical Games, Republic, Chai, and NFTBank. In the second round of funding, the venture capital firm established a fund with a total of $200 million. A significant amount of the capital was invested in new businesses that were seeking seed funding all the way up to Series B funding.

Venture Capital still funding crypto startups

South Korean VC firm Hashed lost more than $3 billion in LUNA collapse and other VCs also faced the same outcome. According to the data provided by PitchBook, venture capital firms invested $17.5 billion in cryptocurrency businesses during the first half of 2022. The biggest amount of funds came in during the first quarter, totaling $9.85 billion.

During the second quarter, investors put in only $6.76 billion, representing a decrease of 31% from the first quarter’s total. The crypto winter was a contributing factor to the declines, as a result of which several crypto businesses saw their valuations decrease.

David Nage, VC Portfolio Manager at Arca, argued that the decrease in funding may not continue because some venture capitalists are still investing and others are waiting for firm valuations to cool off before committing their funds anywhere from September onward. Nage further said: “There’s been this kind of viral dialogue that sometime around September, valuations are gonna come down even more significantly and it’s just gonna be a frenzy.”

Conclusion

The sharp decline in the value of Luna, the sister cryptocurrency of algorithmic stablecoin Terra, which had almost rendered it valueless, sent tremors throughout the crypto market. Some industry experts have compared the decline in the value of cryptocurrencies to the severity of the global financial crisis that occurred in 2008. As a result of the fallout from Terra’s collapse, venture capital firms made it a point to emphasize the importance of fundamentals to the Web3 startups in their portfolios.

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