Sequoia Capital Drops Its FTX Holdings to $0, Following “Liquidity Crunch”

• VC firm, Sequoia said that the platform was writing down the full value of its investments in FTX.
• Sequoia Capital invested around $214 million in the FTX platform last year.

Sequoia Capital, the US-based venture capital firm, has dropped its FTX investment to zero dollars. In a recent letter to investors, Sequoia Capital disclosed that the platform was writing down the entire value of its holdings in the FTX exchange. The VC platform has clarified its latest decision by citing FTX’s “liquidity crunch” and “solvency risk” as factors.

Sequoia stated:

We are in the business of taking risk. Some investments will surprise to the upside, and some will surprise to the downside.

Last year, Sequoia Capital invested approximately $214 million in FTX’s international and US businesses.

A Sudden Loss for FTX

The financial platform, Sequoia Capital revealed that the firm has invested $150 million in FTX.com and FTX.us through its Global Growth III fund. It also invested $63.5 million in the exchange and its US division through its SCGE Fund. These holdings account for 3% of the Global Growth III fund and less than 1% of the SCGE fund.

The VC firm added:

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 firm additionally mentioned that it has conducted a “rigorous diligence procedure” throughout its investment in the FTX. Also, the exchange has generated around $1 billion in revenue and more than $250 million in operating income in 2021.

Moreover, in the statement, the platform promised its investors that the company will continue to conduct significant research and “thorough diligence” in the future.