Major VC Firm Sequoia Capital writes off its $210M investment in crypto exchange FTX

November 14, 2022

By Sharan Kaur Phillora

Venture capital firm Sequoia Capital announced on social media that it has marked down its initial investment of $210 million towards the cryptocurrency exchange FTX to $0, due to potential bankruptcy and solvency issues.

Here’s what we know:

Sequoia Capital sent a letter to its partners Wednesday informing them about its investment in the cryptocurrency exchange FTX. The VC firm invested over $210 million in FTX.com and FTX US. However, the firm noted that its exposure to FTX is limited.

“We own FTX.com and FTX US in one private fund, Global Growth Fund III,” cited the Twitter post. Sequoia shared that FTX is not included in the top ten positions of the fund Sequoia’s $150 million cost basis accounts represent less than 3% of the committed fund capital.

Moreover, Sequoia stated that SCGE Fund, LP invested 1% of its 9/30/2022 portfolio of $63.5 million in FTX.com, as well as FTX US. The venture capital further clarified that even though it is in the “business of taking risk,” it conducted “extensive research” during the time of the investment.

Sequoia also noted that FTX generated $1 billion in revenue and over $250 million in operating income which was announced publicly in August 2022, while highlighting that its exposure to FTX was limited.

Sam Bankman-Fried’s FTX which was valued at $32 billion in early 2022, was found unusually involved with Bankman-Fried’s trading firm Alameda Research.

Facing a liquidity crunch, FTX asked other major crypto exchanges for help. Binance CEO Changpeng Zhao (CZ) originally said his company intended to acquire FTX and provide liquidity.

While the world’s leading crypto exchange Binance initially agreed to purchase FTX, the deal soon fell through due to corporate due diligence, mishandled customers, and alleged US agency investigations.

About the author

Sharan Kaur Phillora’s thirst for knowledge has led her to study many different subjects, including NFTs and Blockchain technology – two emerging technologies that will change how we interact with each other in the future. When she isn’t exploring a new idea or concept, she enjoys reading literary masterpieces.