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Sequoia Capital writes down the entire value of its FTX shares


(Bloomberg) – Sequoia Capital has written down the full value of its holdings in FTX, a signal the venture capital firm sees no clear path to recoup its investment in the exchange. Cryptocurrencies are in trouble.

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The VC firm invested about $214 million last year in FTX’s US and international businesses, Sequoia told its investors Wednesday. A company spokesman said the document includes shares of both FTX.com and FTX.us.

“We are in the business of taking risks,” Sequoia wrote in a message to investors. “Some investments will surprise on the upside, and some will surprise on the downside.”

Sequoia is one of a number of prominent backers that could potentially lose big on Sam Bankman-Fried’s FTX holdings. Others include BlackRock Inc., Tiger Global Management and SoftBank Group Corp.

A smaller venture capital fund, Multicoin Capital, told investors Wednesday that about 10% of its assets under management have been affected. “Unfortunately, we are unable to withdraw all of the Fund’s assets on FTX,” Multicoin wrote in a letter reviewed by Bloomberg.

The sudden loss of trust in FTX.com among customers has led to deep problems with the cryptocurrency exchange. People rushed to withdraw and sell off the tokens associated with the company, causing a drop in liquidity. One competitor, Binance, agreed to buy FTX.com and then drew on concerns about FTX’s financial health.

Bankman-Fried held a call with investors on Wednesday and said that FTX.com needed cash or would have to file for bankruptcy, Bloomberg reported. The US entity, FTX.us, stands at a distance from the crisis, but Sequoia’s post shows a lack of confidence in that asset.

Sequoia sought to reassure investors, saying that FTX accounts for less than 3% of the committed capital in the fund with the greatest exposure to FTX. Sequoia says that fund has raised about $7.5 billion.

Here is the full memo:

–With support from Hannah Miller.

(Updates with additional reporting begin in the second paragraph.)

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