A year later, Bankman-Fried was convicted of seven criminal counts, and Sequoia partner Alfred Lin took to Twitter/X that evening: "Today's swift and unanimous verdict confirms what we already knew: that SBF misled and deceived so many, from customers and employees to business partners and investors, including myself and Sequoia," the statement said.
Lin said the firm had reviewed its due diligence process as a result, without giving details.
After a crypto collapse, Bankman-Fried resigned in November 2022, and about 130 companies affiliated with FTX entered voluntary bankruptcy proceedings.
Just after FTX filed for bankruptcy, Sequoia, a lead investor in FTX, sent a letter to its limited partners saying it was going to mark down the value of its investment to zero.
Sequoia had investments in FTX and FTX.com in its Global Growth Fund III, although FTX was not one of the top 10 holdings in the fund, and its $150 million in cost basis represented less than 3% of the committed capital of the fund, according to its letter to investors last year.
Sequoia's $150 million loss on FTX was offset by the fund's roughly $7.5 billion realized and unrealized gains, Sequoia said in its 2022 letter.
"We are in the business of taking risk. Some investments will surprise to the upside, and some will surprise to the downside. We do not take this responsibility lightly and do extensive research and thorough due diligence on every investment we make," the 2022 letter said. "At the time of our investment in FTX, we ran a rigorous due diligence process."
But Dennis Kelleher, head of BetterMarkets.org, a non-profit consumer and investor advocacy group in Washington, said he isn't buying the Sequoia line and issued a response, also on Twitter/X.
FTX "wanted to buy and influence as many elected officials as possible," said Kelleher, who met with Bankman-Fried in May 2022. If the Sequoia due diligence review "was genuine and extensive, they would have talked to us at BetterMarkets." After meeting with FTX, Kelleher added, and "rejecting their bribe, it was easy to see the lies and that he (Bankman-Fried) was a financial predator. How did we see that so clearly?"
BetterMarkets.org, in a statement on its website following the Bankman-Fried conviction said: "Crypto commingles brokers, dealers, exchanges, clearing, custody, hedge funds and more in a cauldron of conflicts that threaten customers, investors, markets, and financial stability, They then spend their profits to fight regulators trying to enforce the law while trying to buy enough elected officials to get special interest legislation enacted to enable them to unleash this socially useless product on hardworking Americans and retirees."
Sequoia did not respond to a request for comment.
Pension plans also were among the Sequoia venture fund investors.
Direct and Indirect
In 2018, the Alaska Permanent Fund Corp. committed $200 million to Sequoia's Global Growth Fund III, and the Washington State Investment Board retirement system approved an allocation of up to $350 million to the same fund. Alaska Permanent currently oversees $77.2 billion and Washington State oversees $154 billion.
Other pension funds also lost money in FTX through direct investments in the company or indirectly through VC and hedge funds.
Those included the Ontario Teachers' Pension Plan, a direct investor in FTX. Alaska Permanent and the Washington State Board were among indirect investors via Sequoia Capital and other venture capital firms.
The C$249.8 billion ($181 billion) Ontario Teachers invested $75 million in FTX in October 2021, then another $20 million in January 2022, according to the pension fund. The pension plan held the FTX investment in its Teachers' Venture Growth platform.
Ontario Teachers marked down to zero its $95 million investment in FTX. And Singapore sovereign wealth fund Temasek wrote down $275 million invested in FTX. Temasek Holdings, Singapore, has $287.5 billion in assets.
Institutional Venture Partners fund also had exposure to FTX, and investors included Tennessee Consolidated Retirement System, City & County of San Francisco Employees' Retirement System and Maryland State Retirement & Pension System as well as the Alaska Permanent Fund.
The Illinois Municipal Retirement Fund, based in Oak Brook, Ill., also had exposure to FTX through an investment with Lightspeed Venture Partners. The pension fund oversees $45 billion.
Money managers with direct or indirect exposure to FTX included BlackRock, Tiger Global Management, Thoma Bravo, Lightspeed, Senator Investment Group and VanEck as well as hedge fund managers Paul Tudor Jones, Alan Howard and Israel "Izzy" Englander, according to FactSet Research Systems, Bloomberg and Pensions & Investments' research database.
Missouri State Employees' Retirement System had a $1.2 million exposure to FTX through an investment in the BlackRock PE Co-Investment 2021 fund. The system manages $10.9 billion.
Other venture and hedge funds with investments in FTX included: SoftBank Vision Fund II, Insight Partners, Ribbit Capital, Third Point, Paradigm, Steadview Capital, Altimeter, BOND, New Enterprise Associates, Coinbase Ventures, Willoughby Capital, 40 North, Senator Investment Group, Sino Global Capital, Circle Ventures, Lux Capital Group and Institutional Venture Partners, according to PitchBook data.
FTX at its peak was valued at $32 billion when it went on a fundraising round to investors including Temasek, Paradigm, Ontario Teachers and SoftBank Vision Fund II.