Sequoia’s investment in FTX has not affected its fund

November 13, 2022

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Sequoia Capital, a leading venture capital firm, has written down its investment in the troubled cryptocurrency exchange FTX to zero. It is worth noting that the firm was one of the investors in the exchange’s $900 million investment round in July 2021, which helped increase the exchange’s valuation to $18 billion.

On Thursday, November 10, 2022, Sequoia announced on Twitter that the venture capital company had written a note to limited partners (LPs) saying that its $213.5 million investment in FTX and FTX.US, the American branch of the exchange, had been reduced to zero.

Using its Global Trust Fund III, Sequoia put $150 million into FTX and FTX.US. However, this investment represented barely 3% of the fund’s total capital. The VC firm reassured investors that their money was safe in the fund, which has a total of $7.5 billion in gains (both realized and unrealized). The company added:

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“At the time of our investment in FTX, we ran a rigorous diligence process. In 2021, the year of our investment, FTX generated approximately $1B in revenue and more than $250 million in operating income.”

Sequoia’s investment in FTX

Sequoia has informed its limited partners (LPs) that the company is “developing quickly” on the FTX situation but it cannot yet comment on the nature or amount of the risk.

Meanwhile, one of the most outspoken skeptics of cryptocurrencies, Elizabeth Warren, a senator for the United States, has pledged to keep pushing for the SEC to “enforce the law to protect consumers and financial stability.”

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Senator Warren, commented on the FTX saga, saying that the collapse of the exchange proved the business was nothing but “smoke and mirrors.”

The collapse of one of the largest crypto platforms shows how much of the industry appears to be smoke and mirrors. We need more aggressive enforcement and I'm going to keep pushing @SECGov to enforce the law to protect consumers and financial stability.https://t.co/uOPi8MV25J

— Elizabeth Warren (@SenWarren) November 10, 2022