Sequoia Capital's $213.5m Investments in FTX Marks Down to $0

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Annie Li   Nov 10, 2022 09:30 2 Min Read

The liquidity situation successful the cryptocurrency trading level FTX.com continues to escalate successful the crypto market. On November 10, Sequoia Capital shared a enactment connected FTX sent to Global Growth Fund III connected Twitter.

“Based connected our existent understanding, we are marking our concern down to $0,” the Silicon Valley-based steadfast said Wednesday.

The connection reads the liquidity crunch created solvency risks for FTX. The afloat quality and grade of this hazard are not yet known. 

Sequoia said the institution is inactive trying to reassure investors that it has constricted vulnerability to FTX.

Sequoia Capital emphasized that adjacent among the money with the largest vulnerability to FTX named GGFIII, which has investments successful FTX.com and FTX.US, is not successful the fund's apical 10 positions, and the $150 cardinal outgo ground lone accounts for the money has little than 3% of committed capital. Losses of $150 cardinal were offset by realized and unrealized gains of $7.5 billion, truthful the money held up well.

The SCGE Fund invested a full of $63.5 cardinal successful FTX.com and FTX.US, representing little than 1% of the SCGE Fund's September 30, 2022 portfolio astatine just value.

Sequoia told investors that it spent astir $213.5 cardinal connected FTX's planetary and U.S. operations past year.

"We're successful a risk-taking business," Sequoia Capital said. "Some investments volition astonishment you, and immoderate volition disappoint."

In addition, it stated that erstwhile choosing to put successful FTX, it conducted strict owed diligence connected it. In 2021, erstwhile it invested, FTX generated astir $1 cardinal successful gross and much than $250 cardinal successful operating income.

However, the accelerated alteration successful the cryptocurrency marketplace was unexpected for the company, but fortunately, FTX is not the fund's apical 10 holdings.

The institution said it volition pass with investors successful a timely mode if determination is immoderate further news.

The crushed wherefore Sequoia Capital straight chose to constitute down tin partially explicate that the institution has mislaid assurance successful FTX and believes that determination is nary different wide mode to retrieve its concern successful FTX.

Other companies, including BlackRock, Tiger Global, SoftBank Group, and the Ontario Teachers' Pension Fund, which ranks among the apical 5 pension funds successful Canada, are each connected the database of FTX's customers and whitethorn besides endure losses this time.

According to Bloomberg, FTX whitethorn look a backing spread of up to $8 billion, and without a currency injection, the institution volition request to record for bankruptcy.

Binance has announced on Twitter that it volition “not prosecute the imaginable acquisition of FTX”, among different reasons, owed to FTX’s mishandling of lawsuit funds.

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