Sequoia Capital Dumps Its Stake in FTX to Zero

• Sequoia Capital Invested more than $214 million in FTX’s domestic and international businesses.
• The Capital firm has marked down the entire $214M FTX stake to zero.
• They now have around $85 billion in assets now under control.

The Sequoia Capital team just revealed that they were entirely devaluing their FTX holdings. Sequoia cited FTX’s “liquidity crisis” and “solvency risk” as justifications for its decision in a letter to investors. Last year, the VC company invested over $214 million in FTX’s worldwide and US companies.

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Recently, a liquidity crunch has created solvency risk for FTX. The full nature and extent of this risk are not known at this time. Based on our current understanding, we are marking our investment down to $0.

Sequoia Capital

Keeping in view, until a day ago FTX was halfway through being bought by Binance, the biggest exchange in the world. A recent rumor, however, indicated that Binance was probably going to back away from taking over the troubled business. 

Sam Bankman-Fried, the founder of FTX, also just deleted a string of tweets that guaranteed the security of all the assets on the exchange. Hence given FTX’s present situation, investors have been staying away from it.

Reportedly, as part of FTX’s $900 million Series B investment round in July 2021, Sequoia made investments in the now-cash-strapped cryptocurrency exchange. At the time, this was the biggest crypto investment ever documented.

Sequoia told its partners that it thoroughly investigates each and every investment with due diligence, and FTX was no exception.

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

Sequoia’s letter

Sequoia added that it would communicate its next movements to its partners when more information becomes available.

Sequoia Capital now has around $85 billion in assets now under control. Additionally, it has made early investments in digital behemoths Apple and Google as well as more recently Airbnb.

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