Sequoia says investment in FTX will not adversely affect its fund

Major venture capital firm Sequoia Capital has written down the value of its investment in distressed cryptocurrency exchange FTX to zero.

Notably, the company was one of the investors who participated in FTX’s $900 million funding round in July 2021, at the time the exchange was valued at $18 billion.

Sequoia cuts FTX investment to $0

and Note The venture capital firm has invested in FTX and FTX.US, units of the US-based exchange, to the Limited Partners (LPs), which was revealed via Sequoia’s Twitter handle on Thursday (November 10, 2022). ) totaled $213.5 million. , is marked down to $0.

Here is a note I sent to GGFIII’s LP regarding FTX. pic.twitter.com/Cgp1Yxk1pz

— Sequoia Capital (@sequoia) November 10, 2022

Sequoia invested $150 million in FTX and FTX.US through Global Trust Fund III, but this investment represented only 3% of the fund’s total capital. The venture capital firm has reassured the LP that the fund is in good financial standing as the fund has realized profits of $7.5 billion and has unrealized gains.

Separate investments of $63.5 million were also made in both entities through the SCGE Fund. But the exposure was his 1% of the portfolio.

Sequoia further said it always conducted a thorough due diligence process before investing and did the same with FTX. The company said in July 2021 he was one of his 60 investors who raised $900 million in FTX’s Series B funding, with the exchange valued at an estimated $18 billion. .

“At the time of our investment in FTX, we undertook a rigorous scrutiny process. In 2021, the year of our investment, FTX is expected to generate approximately $1 billion in revenue and more than $250 million in sales. We made a profit.”

Sequoia said the nature and extent of the risk is currently unknown, but the company told LP it will provide more information on the status of its “rapidly developing” FTX.

Meanwhile, it remains to be seen what actions other FTX backers such as SoftBank and Pantera Capital Temasek will take.

The response continues to track the collapse of FTX

US Senator Elizabeth Warren weighed The FTX narrative says that the exchange’s collapse shows that the industry is all about “smoke and mirrors.” Senator Warren, one of his most vehement cryptocurrency critics on the Capitol, called for aggressive enforcement against the SEC to “enforce laws to protect consumers and financial stability.” He said he would continue.

Former Kraken CEO Jesse Powell long tweet thread, accused FTX CEO Sam Bankman-Fried of reckless and anti-social behavior. Powell also said:

“The damage here is huge. A currency implosion of this magnitude is a gift to bitcoin haters around the world. We will be working to undo this for years to come.”

The former Kraken CEO also accused U.S. regulators and lawmakers of failing to provide an enabling environment and appropriate regulatory policies for cryptocurrency companies.