One of the leading venture capital firms in the world, Sequoia, said that its third global growth fund has $150 million of exposure to both FTX and FTX.US. The US represented less than 3% of the fund’s overall capital commitment.
After FTX transaction with peer Binance fell through, Sequoia Capital informed investors on Wednesday that the company had limited exposure to FTX and would withdraw its investment from the ailing cryptocurrency exchange.
FTX was valued at $32 billion earlier this year
In recent days, a liquidity crunch has created solvency risk for FTX,” Sequoia said in a note to investors posted on Twitter. “Based on our current understanding, we are marking our investment down to $0,” the Silicon Valley-based firm said Wednesday.
“The full nature and extent of this risk are not known at this time,” Sequoia said, adding that they are monitoring the situation which is developing quickly. FTX, owned by 30-year-old entrepreneur Sam Bankman-Fried, was valued at $32 billion earlier this year.
The US launched investigations into the sudden implosion of the crypto trading platform
Sequoia made its announcement at the same time that the CEO of rival exchange Binance Changpeng Zhao pulled out of a proposal to buy FTX, putting the struggling company at risk of a liquidity crisis.
Additionally, on Wednesday, reports claim that investigations into the abrupt collapse of the cryptocurrency trading platform have been opened by the Securities and Exchange Commission and the U.S. Department of Justice.
The native token of FTX, FTT, fell by almost 30% on Thursday and traded for $2.21. With bitcoin striking a new low for the year earlier this week, the larger cryptocurrency market has also suffered.