Loss of IDR 2.3 Trillion on FTX, Sequoia Capital Apologizes to Investors

JAKARTA – A leading US venture capital (VC) company, Sequoia Capital, announced its apology to investors for the losses suffered by the company as a result of investing in the bankrupt crypto exchange, FTX. Sequoia had to lose 150 million US dollars (equivalent to IDR 2.3 trillion) due to the collapse of the crypto exchange founded by Sam Bankman-Fried.

The Wall Street Journal reported on the apology, citing people familiar with the matter. Sequoia partners told investors regarding their fund in a phone call on Tuesday that the company will step up its due diligence process when it comes to future investments.

This is also a problem that is evaluated by the company. Therefore, going forward Sequoia will “be in a position to have an early-stage startup financial report audited by one of the Big Four accounting firms.”

For your information, The Big Four is the largest professional services network in the world and includes Deloitte, Ernst & Young (EY), Peat Marwick Goerdeler (KPMG), and PricewaterhouseCoopers (PwC).

Sequoia scrapped its entire investment in FTX earlier this month after the cryptocurrency exchange struggled to meet withdrawal requests. Not long after, the FTX filed for bankruptcy on November 11. After that, Sam Bankman-Fried resigned as CEO.

As reported by CryptoNews, this investment is "one of the largest ever written by a venture company in the company", the report said. This comes after the company "neglected traditional corporate controls such as external board oversight typical for such a large investment."

Sequoia partners claimed on a phone call that the company was conducting due diligence on FTX. However, it was “obfuscated by the FTX based on a recent bankruptcy filing, the people said.”

In particular, the company argues that due diligence was obscured by FTX founder Sam Bankman-Fried regarding the exchange's connection to its parent company, Alameda Research, a crypto trading services firm.

As Bankman-Fried has revealed that FTX lent customer funds to Alameda Research, which in turn lost billions of dollars, causing FTX to lose up to 8 billion US dollars.