FTX News: Sequoia Capital To “Write-Off” $210 Mln Amid Bankruptcy Risks
Crypto exchange FTX continues to face a liquidity crunch as rival Binance backs away from a potential acquisition. FTX’s website is back online with a banner that states, “FTX is currently unable to process withdrawals. We strongly advise against depositing.” Meanwhile, Sequoia Capital on Thursday announced that it’s marking investments in FTX to $0 due to bankruptcy risks.
Sequoia Capital Marks Its Investment in FTX to $0
Venture capital firm Sequoia Capital in a tweet on November 10 disclosed that it’s marking over $210 million in investments in FTX to $0. The venture capital firm cites a letter sent to its LPs about investments in FTX, which currently faces a liquidity crunch and risks insolvency.
“In recent days, a liquidity crunch has created solvency risk for FTX. The full nature and extent of this risk is not known at this time. Based on our current understanding, we are marking our investment down to $0.”
Sequoia Capital clarified that it has limited exposure to beleaguered FTX. Global Growth Fund III (GGFIII) is the only private fund with exposure to FTX.com and FTX US. Moreover, FTX is “not a top ten position in the fund,” with a $150 million cost basis accounting for less than 3% capital in the fund. In fact, almost $7.5 billion in realized and unrealized gains offsets the $150 million loss.
Sequoia and other members of an FTX advisory board reportedly held a call with FTX CEO Sam Bankman-Fried. However, the detailed balance sheet data has not been shared with any investors. Moreover, other investors also look to write-off their investments in FTX to zero. Crypto exchange was valued at $32 billion after raising funding this year.
Binance Backs Out From Proposed Acquisition
Crypto exchange Binance on Wednesday backed out from the proposed acquisition of FTX. It cites mishandled customer funds and alleged US agency investigations as reasons for not pursuing the proposed acquisition.
Other investors including Singapore’s state firm Temasek are currently engaging with FTX. The rumor of a potential state-sponsored bailout is currently spreading on Crypto Twitter.
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