More Troubles for FTX: Sequoia Capital Gave Up its FTX Stakes

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• Sequoia Capital gave up its $213.5 million investment at the FTX exchange.
• According to the firm, FTX and FTX.US were a complete loss.
• Sequoia Capital joins Galaxy Digitals and others in confirming its exposure to FTX with this announcement.
• It assures investors that its Global Growth Fund III has limited exposure to the exchange.
• The Sequoia decision was met with mixed reactions on Twitter.
• Crypto firms saw the need to clarify their exposure to FTX due to the turmoil ravaging the exchange.

The challenges confronting FTX took another dimension on Thursday after Sequoia Capital gave up its $213.5 million investment with the exchange.

The venture capital firm confirmed the decision in a letter addressed to its investors and shared on its Twitter handle. Sequoia Capital, in the letter, described its exposure to FTX and FTX.US as a complete loss.

The firm, with this announcement, joins the likes of Galaxy Digitals and others who have confirmed their exposure to FTX. In its statement yesterday, Galaxy said its exposure to FTX is worth $76.6 million.

Meanwhile, Sequoia believes the troubles plaguing FTX have generated a solvency risk. However, it assures investors that its exposure to the exchange is limited in its private fund, Global Growth Fund III. Further, the venture capital is optimistic that its resolve to give up the investment wouldn’t pose any detriment to the fund.

Reactions Trail Sequoia Decision

Notably, this decision by Sequoia was met with mixed reactions from Twitter users. One user, identified as Samir Arora, condemned the move.

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You normally expect the PE/VC fund to support, guide, encourage, be a sounding board for co in the middle of a crisisHere they are writing off the investment faster than a public mkt fund would do while the co is looking for new funds,trying to save its business etc. Just wow https://t.co/326agFGlkn

— Samir Arora (@Iamsamirarora) November 10, 2022

Peter Lasinger commended on how Sequoia has chosen to handle the issue.

Bad news for #startups and the #blockchain space (not talking about #crypto). In such situations transparency and communication is important and often lacking. Hence, cudos to @sequoia and how they are handling this. https://t.co/COcei08uQq

— Peter Lasinger (@peterlasinger) November 10, 2022

Another user, MOASS, in a reaction, describes Sequoia Capital as a gambling firm that gambles with its clients’ funds. He alleged that Sequoia also took a 5% gamble in a struggling Citadel Securities in early 2022.

Recall that the crypto space has been shaken in the past few days by numerous developments involving FTX, its native token FTT, and Alameda Research. Notably, both FTX and Alameda Research were founded by Sam Bankman-Fried.

The problem befalling FTX manifested after a leaked balanced sheet showed that Alameda Research had billions of dollars of its assets tied up in the FTX token (FTT). Following this development, Binance, one of the world’s largest crypto exchanges, began liquidating its FTT holdings, resulting in an approximately 75% plunge in FTT prices.

After the travail ravaging FTX dominated the market, numerous crypto firms saw the need to clear the air about their exposure to the exchange. So far, Coinbase (NASDAQ:COIN), Tether, Circle, and several others have denied having exposure to FTX.

On the Flipside

• Amid all the darkness, Justin Sun, founder of Tron network, revealed in a tweet that he and his team are working with FTX on a solution. As the founder of Tron emerges as the latest prospective FTX Savior, TRX rose 4,000% for a short time.

Why You Should Care

The recent events surrounding FTX have put the exchange in a bind. A Bloomberg report indicated that FTX was facing bankruptcy as a result of an $8 billion shortfall. In addition, due to the recent withdrawal of venture capitalists, FTX may face even greater challenges.

See original on DailyCoin