1 year ago
Venture superior elephantine Sequoia Capital is marking its concern successful the embattled crypto speech FTX down to $0. “In caller days, a liquidity crunch has created solvency hazard for FTX,” the steadfast stressed, adding that “The afloat quality and grade of this hazard is not known astatine this time.”
Sequoia Capital Deems Its Investment successful FTX Worthless
Sequoia Capital sent a missive to its partners Wednesday informing them astir its concern successful cryptocurrency speech FTX. The task superior steadfast wrote:
In caller days, a liquidity crunch has created solvency hazard for FTX. The afloat quality and grade of this hazard is not known astatine this time. Based connected our existent understanding, we are marking our concern down to $0.
The VC steadfast invested implicit $210 cardinal successful FTX.com and FTX US. However, the steadfast noted that its vulnerability to FTX is limited.
“We ain FTX.com and FTX US successful 1 backstage fund, Global Growth Fund III … our $150 cardinal outgo ground accounts for little than 3% of the committed superior of the fund,” the steadfast explained. In addition, the Sequoia Capital Global Equities money invested $63.5 cardinal successful FTX.com and FTX US, representing little than 1% of the fund’s portfolio astatine just worth arsenic of Sept. 30.
Noting, it is “in the concern of taking risk,” Sequoia Capital stressed:
At the clip of our concern successful FTX, we ran a rigorous diligence process.
The task superior steadfast noted that erstwhile it invested successful FTX past year, the crypto institution generated astir $1 cardinal successful gross and much than $250 cardinal successful operating income.
Sequoia Capital participated successful a $420 cardinal Series B backing circular of FTX, which accrued the crypto firm’s valuation to $25 billion. A full of 69 investors participated, including the Ontario Teachers’ Pension Plan Board, Temasek, Sea Capital, Tiger Capital, Rabbit Capital, Lightspeed Venture Partners, and funds and accounts managed by Blackrock.
Facing a liquidity crunch, FTX asked different large crypto exchanges for help. Binance CEO Changpeng Zhao (CZ) primitively said his institution intended to get FTX and supply liquidity. However, Binance said Wednesday that it decided not to proceed with the acquisition. “As a effect of firm owed diligence, arsenic good arsenic the latest quality reports regarding mishandled lawsuit funds and alleged US bureau investigations, we person decided that we volition not prosecute the imaginable acquisition of http://FTX.com.”
What bash you deliberation astir VC steadfast Sequoia Capital considering its concern successful FTX worthless? Let america cognize successful the comments conception below.
Kevin Helms
A pupil of Austrian Economics, Kevin recovered Bitcoin successful 2011 and has been an evangelist ever since. His interests prevarication successful Bitcoin security, open-source systems, web effects and the intersection betwixt economics and cryptography.
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