Enterprise capital big Sequoia Capital is marking its funding within the embattled crypto change FTX all the way down to $0. “In current days, a liquidity crunch has created solvency danger for FTX,” the agency harassed, including that “The total nature and extent of this danger isn’t recognized at the moment.”
Sequoia Capital Deems Its Funding in FTX Nugatory
Sequoia Capital despatched a letter to its companions Wednesday informing them about its funding in cryptocurrency change FTX. The enterprise capital agency wrote:
In current days, a liquidity crunch has created solvency danger for FTX. The total nature and extent of this danger isn’t recognized at the moment. Primarily based on our present understanding, we’re marking our funding all the way down to $0.
The VC agency invested over $210 million in FTX.com and FTX US. Nevertheless, the agency famous that its publicity to FTX is proscribed.
“We personal FTX.com and FTX US in a single non-public fund, World Progress Fund III … our $150 million price foundation accounts for lower than 3% of the dedicated capital of the fund,” the agency defined. As well as, the Sequoia Capital World Equities fund invested $63.5 million in FTX.com and FTX US, representing lower than 1% of the fund’s portfolio at truthful worth as of Sept. 30.
Noting, it’s “within the enterprise of taking danger,” Sequoia Capital harassed:
On the time of our funding in FTX, we ran a rigorous diligence course of.
The enterprise capital agency famous that when it invested in FTX final yr, the crypto firm generated roughly $1 billion in income and greater than $250 million in working earnings.
Sequoia Capital participated in a $420 million Collection B funding spherical of FTX, which elevated the crypto agency’s valuation to $25 billion. A complete of 69 buyers participated, together with the Ontario Academics’ Pension Plan Board, Temasek, Sea Capital, Tiger Capital, Rabbit Capital, Lightspeed Enterprise Companions, and funds and accounts managed by Blackrock.
Dealing with a liquidity crunch, FTX requested different main crypto exchanges for assist. Binance CEO Changpeng Zhao (CZ) initially mentioned his firm meant to accumulate FTX and supply liquidity. Nevertheless, Binance mentioned Wednesday that it decided not to proceed with the acquisition. “On account of company due diligence, in addition to the newest information studies relating to mishandled buyer funds and alleged US company investigations, we have now determined that we are going to not pursue the potential acquisition of http://FTX.com.”
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