Up until a day ago, FTX was halfway through being acquired by Binance, the biggest exchange in the world. A recent report, however, indicated that Binance was probably going to back away from taking over the troubled business. Sam Bankman-Fried, the founder of FTX, also just deleted a string of tweets that guaranteed the security of all the assets on the exchange. As a result, investors have shied away from FTX.
Now to add to the chaos, it has come to light that the FTX Pro download Page is no longer available on the Apple App Store. However, users, who had already downloaded it can continue to use it normally even though the download page is no longer accessible on Apple’s App Store. The app is still available for download on Google Play. It’s unclear whether the App Store withdrew the app or if Sam Bankman-Friend’s Exchange delisted itself on purpose. That leaves crypto enthusiasts in speculation about the new development.
Sequoia Capital Reduces Its Investment In FTX To $0
The Sequoia Capital team just revealed that they were entirely devaluing their FTX holdings. Sequoia cited the exchange’s “liquidity crunch” and “solvency risk” as justifications for its decision in a letter to investors. The VC company invested over $214 million in the exchange’s worldwide and US companies last year. The VC firm stated,
“In recent days, a liquidity crunch has created solvency risk for FTX. The full nature and extent of this risk is not known at this time. Based on our current understanding, we are marking our investment down to $0.”
The venture capital firm disclosed that it had “minimal” exposure to the cryptocurrency exchange company and that it did not hold a top ten position in the fund. Sequoia said that the fund with the greatest exposure to the company, FTX, accounted for less than 3% of committed capital. According to Sequoia, the fund “remains in good form” and has realised and unrealized gains of around $7.5 billion.
The SCGE Fund, L.P. also transferred $63.5 million from FTX.com and FTX US. The ongoing problem does not directly damage the US entity as a whole, but Sequoia’s writedown highlights its lack of trust.
The firm went on to say that they conducted a “rigorous diligence process” before investing in SBF’s business and that in 2021—the year of their investment—the exchange earned over $1 billion in sales and more than $250M in operating profitability.
Additionally, the corporation promised in the message to investors that it would always conduct “deep research” and “thorough diligence.”