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(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 alternate.
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The VC agency put in about $214 million final yr in FTX’s worldwide and US companies, Sequoia informed its traders 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 traders. “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 massive on their holdings of Sam Bankman-Fried’s FTX. Others embody BlackRock Inc., Tiger World Administration and SoftBank Group Corp.
A smaller enterprise fund, Multicoin Capital, informed traders Wednesday that about 10% of its belongings beneath administration have been affected. “Sadly, we weren’t in a position to withdraw the entire 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 alternate. 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 issues with FTX’s monetary well being.
Bankman-Fried held a name with traders 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 traders, saying FTX accounts for lower than 3% of dedicated capital within the fund with the largest publicity to FTX. That fund, Sequoia stated, has realized and unrealized beneficial properties of about $7.5 billion.
Right here’s the total memo:
–With help from Hannah Miller.
(Updates with further reporting beginning within the second paragraph.)
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