Enterprise capital large Sequoia Capital is marking its funding in the embattled crypto alternate FTX right down to $0. “In current days, a liquidity crunch has created solvency threat for FTX,” the agency burdened, including that “The total nature and extent of this threat isn’t recognized presently.”
Sequoia Capital Deems Its Funding in FTX Nugatory
Sequoia Capital despatched a letter to its companions Wednesday informing them about its funding in cryptocurrency alternate FTX. The enterprise capital agency wrote:
In current days, a liquidity crunch has created solvency threat for FTX. The total nature and extent of this threat isn’t recognized presently. Primarily based on our present understanding, we’re marking our funding right 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 one personal fund, International 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 International 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 “in the enterprise of taking threat,” Sequoia Capital burdened:
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 12 months, 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.
Going through a liquidity crunch, FTX requested different main crypto exchanges for assist. Binance CEO Changpeng Zhao (CZ) initially stated his firm supposed to amass FTX and supply liquidity. Nevertheless, Binance stated Wednesday that it determined to not proceed with the acquisition. “Because of company due diligence, in addition to the most recent information experiences relating to mishandled buyer funds and alleged US company investigations, we have now determined that we’ll not pursue the potential acquisition of http://FTX.com.”
What do you consider VC agency Sequoia Capital contemplating its funding in FTX nugatory? Tell us in the feedback part beneath.
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