Sequoia writes-off over $200M FTX investment as ‘worthless’

Venture capital firm Sequoia Capital revealed that its investment in FTX is worthless, as it is marking the investment down to zero, according to a Nov. 10 note sent to its limited partners.

Here is the note we sent to our LPs in GGFIII regarding FTX. pic.twitter.com/Cgp1Yxk1pz

— Sequoia Capital (@sequoia) November 10, 2022

Sequoia continued that its exposure to FTX is limited. According to the leading investment firm, its $150 million investment in the Global Growth Fund III is less than 3% of the fund. Apart from that, the loss has been offset by gains of $7.5 billion from the fund.

Additionally, the $63.5 million invested into FTX and FTX US through the Sequoia Capital Global Equities Fund makes up less than 1% of the fund’s portfolio.

Sequoia’s invested in FTX in 2021 when the exchange raised $900 million at a valuation of $32 billion. The VC firm claimed it ran its due diligence on the exchange before investing; at the time, FTX’s revenue was approximately $1 billion.

It added:

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

The decision to markdown its investment to zero comes after Binance refused to acquire the struggling firm, citing funds mismanagement and regulatory scrutiny.

Meanwhile, reports have revealed that Canada’s third-largest pension fund, The Ontario Teachers’ Pension Plan, was exposed to the struggling firm.

Sequoia is one of the most prominent venture capital firms in the crypto space. The firm has dedicated funds targeted at the industry and has invested in several crypto companies like Fireblocks, Magic Eden, Filecoin, etc.