Enterprise capital big Sequoia Capital is marking its funding within the embattled crypto trade FTX right down to $0. “In latest days, a liquidity crunch has created solvency threat for FTX,” the agency pressured, including that “The complete nature and extent of this threat will not be recognized right now.”
Sequoia Capital despatched a letter to its companions Wednesday informing them about its funding in cryptocurrency trade FTX. The enterprise capital agency wrote:
In latest days, a liquidity crunch has created solvency threat for FTX. The complete nature and extent of this threat will not be recognized right now. 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 restricted.
“We personal FTX.com and FTX US in a single 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 “within the enterprise of taking threat,” Sequoia Capital pressured:
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.
Dealing with a liquidity crunch, FTX requested different main crypto exchanges for assist. Binance CEO Changpeng Zhao (CZ) initially mentioned his firm meant to amass FTX and supply liquidity. Nevertheless, Binance mentioned Wednesday that it determined to not proceed with the acquisition. “On account of company due diligence, in addition to the most recent information reviews relating to mishandled buyer funds and alleged US company investigations, we now have determined that we’ll not pursue the potential acquisition of http://FTX.com.”
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