FTX Seeks Permission to Sell $45M Stake in Sequoia Capital

FTX’s investment arm Alameda Research has agreed to sell its interest in venture capital (VC) firm Sequoia Capital to the Abu Dhabi sovereign wealth fund for $45 million, according to court filings. Sequoia was one of the biggest FTX backers, losing $150 million on its investment after the exchange went bankrupt.

Abu Dhabi Government-owned Investment Fund to Buy Sequoia Interest from FTX

Alameda Research, the sister trading firm of the now-defunct crypto exchange FTX, has secured a $45 million cash deal to sell its interest in Sequoia Capital to the Abu Dhabi sovereign wealth fund. The agreement is part of Alameda’s efforts to offload its crypto and tech venture investments to refund creditors.

If all conditions are satisfied, the deal could close on March 31. But the transaction is still pending approval by a Delaware bankruptcy judge, and such arrangements are typically subject to judicial scrutiny.

According to the filing, the purchaser is Al Nawwar Investments RSC Limited, an Abu Dhabi government-owned investment fund with a current stake in Sequoia. The filing says Alameda received interest from four potential buyers, ultimately striking a deal with Al Nawwar Investments “based on its superior offer and ability to execute the Sale Transaction within a short time frame.”

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The FTX-Sequoia Relationship

The deal between Alameda and Sequoia comes just a few months after FTX filed for bankruptcy, sending shockwaves through the digital assets industry. Alameda played a central role in FTX’s collapse, with the crypto exchange borrowing up to $10 billion of user funds to help the trading firm cover its liabilities.

Sequoia Capital, one of the most successful VC firms in Silicon Valley, has been among the biggest FTX backers. The firm poured $225 million into FTX in 2021, most of that money coming from its multi-billion growth fund.

After FTX collapsed in November 2022, Sequoia wrote down its investments to zero. The VC firm, which lost $150 million on its FTX investments, said Sam Bankman-Fried’s company misled it.

“What gets me is not that we made the investment, it’s the year-and-a-half of working relationship after the investment and I still didn’t see it — and that’s difficult,” said Sequoia Capital partner Alfred Lin, referring to the red flags that contributed to FTX’s downfall.

Do you think the court is likely to reject the sale? Let us know in the comments below.