![Why Ethereum [ETH] address outflows may be headed for DeFi](https://cryptonoiz.com/wp-content/uploads/2023/03/AMBCrypto_An_image_of_a_stylized_Ethereum_logo_with_arrows_poin_22f2aeff-c7bb-4c7d-aec7-547a37a35e82-1-1000x600-360x180.jpg){kind=logo}
Enterprise capital agency Sequoia Capital tweeted out a letter despatched to its companions on Nov. 10 revealing the agency had marked its $213.5 million investments in FTX and FTX US all the way down to $0, claiming them as an entire loss.
The letter mentioned that the disaster going through FTX has “created a solvency danger” however claimed its publicity to the trade is “restricted” in its International Progress Fund III, the place its value foundation for the FTX portion of the fund totaled $150 million.
Right here is the word we despatched to our LPs in GGFIII concerning FTX. pic.twitter.com/Cgp1Yxk1pz
— Sequoia Capital (@sequoia) November 10, 2022
Sequoia additionally reassured its companions that the writing off of FTX wouldn’t have a detrimental influence on the fund, saying it accounted for lower than 3% of the capital dedicated to it, including:
“The $150M loss is offset by ~$7.5B in realized and unrealized good points in the identical fund, so the fund stays in good condition.”
The enterprise capital agency additionally reported having invested $63.5 million into FTX and FTX US from its Sequoia Capital International Equities Fund. Nevertheless, the holdings represented lower than 1% of all the portfolio.
Sequoia’s investments into the now cash-strapped cryptocurrency trade got here as a part of FTX’s $900 million Sequence B funding spherical in July 2021 — which was the biggest crypto funding ever recorded on the time.
As for the funding choice, Sequoia reassured its companions that it extensively researches each funding with thorough diligence, and FTX was no totally different:
“On the time of our funding in FTX, we ran a rigorous due diligence course of. In 2021, the 12 months of our funding, FTX generated roughly $1B in income and greater than $250M in working earnings.”
“We’re within the enterprise of taking danger. Some investments will shock to the upside, and a few will shock to the draw back,” the letter defined.
Associated: Breaking: FTX’s Binance rescue deal falls aside in lower than 48 hours
Sequoia added that it might talk its subsequent actions to its companions when extra data turns into out there.
Sequoia Capital at present has about $85 billion of belongings beneath administration and has beforehand made early investments in tech giants Apple and Google and, extra not too long ago, Airbnb.
