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Sequoia Capital marked down to zero the value of its stake in the cryptocurrency exchange FTX — a stake that accounted for a minor percentage of Sequoia’s capital but as of last week likely represented among the most sizable unrealized gains in the venture firm’s 50-year history.
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When Sequoia invested in the Series B round of FTX in July 2021, the high-flying, Bahamas-based outfit was valued at $18 billion. In January of this year, FTX raised $400 million in a Series C round that brought its total funding to $2 billion and its valuation to a breathtaking $32 billion.
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Sequoia’s announcement comes as rival exchange Binance’s CEO Changpeng Zhao backed out of a proposed deal to purchase FTX, leaving the beleaguered firm at risk of a liquidity crisis.
Why it matters
Binance, an early investor in FTX that turned into a fierce rival, announced on Sunday it was selling off its FTT holdings, the native token of FTX exchange, worth $529 million at the time, due to “recent revelations that came to light.” Alameda Research, a trading house also owned by FTX CEO Sam Bankman-Fried, had fully one-third of its assets in FTX’s own FTT token, raising questions about possible market manipulation. And thus leading to FTX’s multi-billion empire coming crashing down.
