Sequoia Capital Writes Down Complete Worth of Its FTX Stake

(Bloomberg) — Sequoia Capital wrote down the total worth of its holdings in FTX, a sign the enterprise capital agency sees no clear path to recouping its funding within the embattled cryptocurrency change.

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The VC agency put in about $214 million final 12 months in FTX’s worldwide and US companies, Sequoia informed its buyers Wednesday. The writedown consists of holdings of each FTX.com and FTX.us, stated a spokeswoman for the agency.

“We’re within the enterprise of taking danger,” Sequoia wrote in a message to buyers. “Some investments will shock to the upside, and a few will shock to the draw back.”

Sequoia is amongst a number of distinguished backers that stand to lose large on their holdings of Sam Bankman-Fried’s FTX. Others embrace BlackRock Inc., Tiger International Administration and SoftBank Group Corp.

A smaller enterprise fund, Multicoin Capital, informed buyers Wednesday that about 10% of its belongings below administration have been affected. “Sadly, we weren’t in a position to withdraw all the Fund’s belongings on FTX,” Multicoin wrote in a letter reviewed by Bloomberg.

A sudden lack of confidence in FTX.com amongst clients uncovered deep issues with the cryptocurrency change. Individuals rushed to withdraw cash and unload tokens related to the corporate, inflicting a liquidity crunch. A rival, Binance, agreed to purchase FTX.com after which pulled out over considerations with FTX’s monetary well being.

Bankman-Fried held a name with buyers Wednesday and stated FTX.com wanted a money infusion or must file for chapter, Bloomberg reported. The US entity, FTX.us, stood at a distance from the disaster, however the Sequoia writedown signifies a insecurity in that asset, too.

Sequoia sought to reassure buyers, saying FTX accounts for lower than 3% of dedicated capital within the fund with the most important publicity to FTX. That fund, Sequoia stated, has realized and unrealized positive aspects of about $7.5 billion.

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Right here’s the total memo:

–With help from Hannah Miller.

(Updates with extra reporting beginning within the second paragraph.)

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