Web3 Weekly: VCs May Not Be Immune To 鈥嬧€婩TX-Induced Contagion

January 11, 2023

Chris Metinko

This is a weekly feature that will look back at the week that was in crypto, blockchain and Web3, and offer insights and analysis. Check out our previous column here.

We鈥檝e covered a lot of the fallout from the collapse and how it has affected a myriad of companies in the crypto space 鈥� from lenders like and to payments companies like to even a crypto-focused bank like .

However, in one of the more intriguing VC-related stories to emerge from the FTX fiasco, late last week the is now asking FTX鈥檚 investors about due diligence.

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The report, which was attributed to two unnamed sources familiar with the inquiry, said regulators are asking the firms what 鈥渄iligence policies and procedures they have in place, if any, and whether they followed them when choosing to invest in FTX.鈥�

The report did not indicate which firms the SEC reached out to or how many. The SEC would have no shortage of firms to question, however, as FTX had dozens and dozens of VC investors and had raised more than $1.8 billion.

Some of the firms to invest in the failed exchange include 鈥� which took the lead in FTX鈥檚 biggest round of $1 billion 鈥� , , , , , , SoftBank Vision Fund 2, , , , , and , per Crunchbase data.

Sequoia apologized to its LPs after the FTX collapse.

The SEC inquiries do not indicate any wrongdoing, but the report said the inquiries could mean VC firms and funds face regulatory scrutiny, as regulators look into whether firms met their fiduciary duties to their own investors.

There is no doubt the FTX debacle already has affected venture capital and investing (as we鈥檝e talked about), but it鈥檚 now looking like it is possible those effects may be heightened substantially as regulators figure out who鈥檚 to blame in a mess that is only beginning to be untangled.

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