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FTX Handed Fresh Blow via Sequoia Capital Decision

According to the letter, FTX, a member of Sequoia Capital's Global Growth Fund III, had "created a solvency risk" with "limited" risk exposure. FTX's cost in the Fund reached $150 million.

Sequoia Capital, one of the world’s largest venture capital firms, revealed on Wednesday in a series of tweets it had wiped its massive investments in the FTX cryptocurrency exchange to $0 USD.

The investment firm has declared FTX a complete loss, totalling $213.5 million in investments, after its liquidity collapse, spiralling cryptocurrency prices downward over the last week.

According to the letter, FTX, a member of Sequoia Capital’s Global Growth Fund III, had “created a solvency risk” with “limited” risk exposure. FTX’s cost in the Fund reached $150 million.

According to the company, the write-off would not negatively hit its Fund and comprised just 3 percent of total investments.

It said: “The $150M loss is offset by ~$7.5B in realized and unrealized gains in the same fund, so the fund remains in good shape.”

The letter continued, stating: “At the time of our investment in FTX, we ran a rigorous due diligence process. In 2021, the year of our investment, FTX generated approximately $1B in revenue and more than $250M in operating income. We are in the business of taking risk. Some investments will surprise to the upside, and some will surprise to the downside,” the letter explained.

Concluding, Sequoia stated it would update its partners on its next decisions as information in due course.

FTX-Binance Deal Falls Through

The news comes after FTX closed a Series B round of funding in July last year, the largest ever recorded for a cryptocurrency firm, totalling $900 million USD.

FTX was set to receive a bailout deal from Binance, the world’s largest cryptocurrency platform, but the deal fell through on Wednesday after the latter’s CEO Changpeng Zhao backed out the deal, citing serious compliance issues.

The failed deal sent shockwaves across the global crypto community, with Bitcoin and Ether falling below $17,000 and $1,660, respectively, along with other major coins following the news.

No information published in Crypto Intelligence News constitutes financial advice; crypto investments are high-risk and speculative in nature.