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Sequoia Capital writes down its entire investment in FTX

Sequoia Capital writes down its entire investment in FTX

Sequoia Capital writes down its entire investment in FTX
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By Shruti Malhotra   | Asmita Pant  Nov 10, 2022 3:37 PM IST (Published)

The American venture capital firm, in a note to the LPs, has written down the full value of its holdings in cryptocurrency firm FTX. The write-down includes holdings of both FTX.com and FTX US.

The American venture capital firm Sequoia Capital has written down the total value of its holdings in cryptocurrency firm FTX. "We are marking down our investment to $0' the firm said in a note to the limited partners. The write-down includes holdings of both FTX.com and FTX US. FTX is the latest cryptocurrency company this year to come under financial pressure.

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Sequoia had invested $214 M in FTX.com and FTX US via Global Growth Fund III and SCGE Fund in 2021. Sequoia Capital said the loss is offset by $7.5 billion in unrealised gains in Global Growth Fund III. The firm has clarified that the investment in FTX via SCGE Fund represents less than one percent of the portfolio.
"We are in the business of taking risks. Some investments will surprise to the upside, and some will surprise to the downside," the venture capital firm stated.
As a result of speculation about FTX's financial condition over the weekend, $6 billion of withdrawals were made in the 72 hours leading up to Tuesday morning.
On Tuesday, Binance CEO Changpeng Zhao took to Twitter to announce that he had signed a letter of intent to acquire FTX after the latter experienced a "significant liquidity crunch."
However, the deal was later called off. "As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of FTX.com," Binance said in a statement on Wednesday.
On Thursday, cryptocurrencies plunged following the Binance-FTX deal call-off. Bitcoin slipped below 17,000.
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