Terra Position Cost CoinShares Over $21M: Q2 Report

Yet another crypto firm has divulged its exposure to Terra.

Coinshares reported a loss of 2.4 million pounds (nearly $3 million at current prices) in the quarter ending June 30—its first negative quarter since going public in March 2021—due to its TerraUSD (UST) holdings.

Some 15.3 million pounds in revenue was offset by 17.7 million pounds in UST. The London-based crypto firm has since exited its UST position. (At current prices, 17.7 million pounds is slightly more than $21.5 million.)

“This financial impact of this episode, despite being relatively small when compared to the losses incurred by other players in our industry, has of course had a material impact on our quarter,” Coinshares CEO Jean-Marie Mognetti said in the report. “Adjusted EBITDA for the quarter stands at a loss of £8.2 million. Excluding the US Terra loss incurred in Q2, our Adjusted EBITDA would have been approximately £9.5 million.”

Terraform Labs’ algorithmic stablecoin, TerraUSD, lost its U.S. dollar peg in May, which caused its governance token, LUNA, to crash spectacularly. In the weeks after the crash, firms including Dragonfly Capital and Multicoin Capital were in a rush to announce that they had no exposure to UST or LUNA.

Terra Crashed Spectacularly. Here's How It Launched.

TerraForm Labs spent four years building its ecosystem and connecting it to other blockchains before things began to unravel earlier this month.  When the TerraUSD algorithmic stablecoin (UST) lost its peg, millions of dollars were wiped out in a matter of days. The coin, which used to carry a redeemable-for-a-dollar guarantee, has been trading for just a nickel. And LUNA, its governance token, which last month had a market cap of more than $30 billion, has seen that metric slip to $680 million....

Others, like Galaxy Digital CEO and Terra backer Mike Novogratz, penned long letters to disclose their exposure—$400 million worth of LUNA at the end of last year, which the company estimated would result in a $300 million quarterly loss.

London-based Coinshares is an asset manager that caters to accredited investors and institutions. The company has its own exchange-traded product, CoinShares Physical, that track a handful of individual assets, including Bitcoin, Ethereum, Solana, Polkadot and Cardano.

But the ETPs are only available to European institutional investors.

Leaning on its focus on institutional investors, the firm puts out a weekly fund flows report, which includes its own products as well as competitors’. It tracks inflows and outflows at crypto-based ETPs.

In the latest report, Coinshares Head of Research James Butterfill wrote that the firm saw $81 million in net inflows last week, making it the fifth week in a row inflows outpaced outflows.

Coinshares reported 1.7 billion pounds (nearly $2.1 billion) in assets under management at the end of June, the lowest since the end of 2020, according to its quarterly report.