Sequoia Capital, a VC firm, announces that it will mark its investment in FTX at $0
- Sequoia Capital, a VC giant, told investors that it is reducing its investment in FTX by zero.
- Binance had been asked by FTX to help them with liquidity problems, Binance’s CEO stated on Tuesday.
- Binance, however, walked away on Wednesday from the deal to buy the rival exchange competitor.
Sequoia Capital, a major venture capital firm, has announced that it will reduce the full amount of its investment in FTX by zero dollars amid uncertainty over the crypto-exchange’s liquidity crunch.
The VC firm sent a note to its investors to inform them of their decision not to fully write off a $214 million investment made in FTX’s US businesses and global businesses. The letter was posted to the VC firm’s website. Twitter accountWednesday
“The full nature and extent this risk is unknown at this time. Based on our current understanding we are marking down our investment to $0,” Sequoia said in the letter..Sequoia Capital also tried to reassure investors that it was not exposed to FTX.
—Sequoia Capital (@sequoia) November 10, 2022
“We are in the business to take risk. Sequoia stated that some investments will surprise on the upside, while others will surprise on the downside.
Sequoia wrote to investors following a dramatic turn of events Wednesday. Binance pulling out of plansTo acquire FTX due to issues“Beyond our control or capability to help.”
This was the culmination of a bizarre series of events that began over the weekend. Sam Bankman-FriedFTX’s CEO is Binance CEO Changpeng “CZ” Zhao exchanged barbs on Twitter, after Zhao tweeted Binance would be liquidating all its FTT tokens — a crypto token native to FTX — due to “recent revelations.”
Zhao did not give any details about the reasons for his decision, but he did say that he was a “reluctant” to change. November 2 CoinDesk report had been stoking market fears about FTX’s liquidity position, at a time when some smaller crypto exchanges suspended withdrawals to users.
Bankman-Fried appeared to respond to Zhao’s tweets on Monday by tweeting: “A competitor is trying to take after us with falserumors,” according to media reports. Bloomberg and Reuters.
But the damage had been doneAnd the tiff weighed on market sentiment, sparking a selloff and a rush for withdrawals. About $6 billion was withdrawn at FTX in the 72 hours prior to Tuesday morning. Reuters reported, citing a message Bankman-Fried sent to staff.
Both Zhao and Bankman Fried then appeared to have broken up. In a whiplash-inducing turnaround, Bankman-Fried announced that he had reached a deal with Binance. Zhao said Binance “signed a non-binding LOI, intending to fully acquire FTX.com and help cover the liquidity crunch.”
But the drama did not end there, and Binance about-turned again on Wednesday, bailing on the acquisition, which sent the crypto market tumbling. After Bankman-Fried had told investors that FTX was facing a liquidity crisis of up to $8billion and needed emergency funding in order to avoid bankruptcy, this was the result. BloombergReport was made on Thursday by a person with direct knowledge.
Bitcoin and most other cryptocurrenciesWednesday’s fall was due to Binance’s announcement of its intention to walk away from the acquisition FTX. At 11.48 p.m. ET, Bitcoin and Ether were both down. ET, Bitcoin and Ether fell by approximately 11% each over the past 24 hours, according To CoinMarketCap, extending a crypto slump this year.
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