The first victims are starting to drop the mask. The venture capital firm Sequoia Capital has just published a letter to its partners stating that the value of its investment in FTX has fallen to zero. The firm was exposed to $214 million.
From $214m to $0
Sequoia Capital, a well-known venture capital firm in the cryptocurrency ecosystem, said in a letter to its partners that all of its investments in FTX are now worthless. The news comes in the context of the case involving Alameda Research and FTX, both of Sam Bankman-Fried’s companies.
The letter, shared by Sequoia Capital on Twitter, details its exposure to FTX through two different funds. In total, the venture capital firm suffered a loss of $213.5 million.
Here is the note we sent to our LPs in GGFIII regarding FTX. pic.twitter.com/Cgp1Yxk1pz
– Sequoia Capital (@sequoia) November 10, 2022
Sequoia Capital explains that FTX faced a “liquidity crisis that created a risk of insolvency”, but says it does not know the extent of the damage, as does every user of the platform. However, the firm has mourned the loss of its investment and now considers it lost.
In its letter, Sequoia Capital states that its exposure to FTX was limited and that the company is doing well. Only two funds were involved, the Global Growth Fund III and the SCGE Fund, with commitments of $150 million and $63 million respectively:
“We are committed to FTX as a going concern.
We hold FTX.com and FTX US in a single private fund, Global Growth Fund III. FTX is not in the top ten holdings of the fund, and our cost base of $150 million represents less than 3% of the fund’s committed capital. “
Despite the $150 million loss, Sequoia’s Global Growth Fund lll is in “good shape” and has brought in about $7.5 billion in realized and unrealized gains that offset the loss.
“Separately, SCGE Fund has invested $63.5 million in FTX.com and FTX US, which represents less than 1% of the portfolio as of September 30, 2022. “
The staggering performance of this venture capital firm’s various funds will not go unmentioned. But above all, one sentence will be remembered: “at the time of our investment in FTX, we conducted a rigorous monitoring process”. No comment.
