Sequoia Capital Writes Down $210 Million FTX Stake to Zero
Venture capital firm Sequoia Capital marks down its $210 million investment in crypto exchange FTX to zero as a severe liquidity crisis threatens the company. Federal regulators also launch investigations into the sudden implosion of the once $32 billion platform.
Venture capital firm Sequoia Capital writes down its $210 million investment in cryptocurrency exchange FTX to zero as a severe liquidity crisis threatens the company. The Silicon Valley firm explains in a note to investors that a recent liquidity crunch creates significant solvency risk for FTX. Sequoia emphasizes that while it takes risks in the venture business, the full nature of this developing situation remains unknown.
This massive devaluation follows the collapse of a proposed rescue deal where rival exchange Binance planned to acquire the troubled platform. FTX, which boasts a staggering $32 billion valuation earlier this year, now faces imminent bankruptcy as federal regulators step in. The U.S. Department of Justice and the Securities and Exchange Commission reportedly launch investigations into the sudden implosion of the crypto trading platform.
Despite the staggering loss, Sequoia reassures investors that the overall impact on its portfolio is limited. The firm states that its $150 million direct exposure accounts for less than 3% of its Global Growth Fund III and is not a top ten position. The fund's realized and unrealized gains from other investments easily offset the FTX loss, leaving the fund in good shape even as the broader cryptocurrency market takes a beating.