In a rare move, American venture capital firm Sequoia Capital reportedly apologized to its fund investors for the $150 million it had lost on the now-bankrupt crypto exchange FTX.
The apology was reported by the Wall Street Journal, citing people familiar with the matter. Sequoia’s partners reportedly told the fund investors on a call on Tuesday that the firm would improve its due-diligence process when it comes to future investments.
A Sequoia partner, the sources said, stated that in the future,
“The firm will be in a position to have even early-stage startups’ financial statements audited by one of the Big Four accounting firms.”
The Big Four are the largest professional services networks in the world and include Deloitte, Ernst & Young (EY), Peat Marwick Goerdeler (KPMG), and PricewaterhouseCoopers (PwC).
Sequoia wrote off its entire investment in FTX earlier this month, after the exchange struggled to fulfill requests for withdrawals. FTX filed for bankruptcy on November 11.
This investment was “one of the largest written by a venture firm in the company,” said the report. This happened after the firm “shirked traditional corporate controls such as external board oversight that are typical for such large investments.”
Sequoia partners claimed on the call that the firm conducted due diligence on FTX. However,
“[It] also believed it was misled by FTX based on its recent bankruptcy filing, the people said.”
Specifically, the company argued that it was misled by the FTX founder Sam Bankman-Fried on the exchange’s connections with its parent company Alameda Research.
It has since been revealed by Bankman-Fried that FTX loaned customer funds to Alameda, which then lost billions of dollars, leaving FTX with a funding gap of up to $8Read more on cryptonews.com