If Sequoia Capital can get fooled—presumably after more due diligence and apparent access to books than you could possibly have gotten while dealing with the charitable arm of FTX FF that was itself almost certainly in the dark—then there is no reasonable way you could have known.
Sequoia has different incentives than EA. By design investments have limited liability, and “companies should be leveraged and hold a linear utility curve” is a dominant concept in finance. FTX unethically using customer deposits would’ve broadly aligned with Sequoia’s interests so long as Sequoia retained the ability to distance themselves from legal and reputational damage.
Sequoia was incentivized to engage in a degree of wilful ignorance, and I would suspect they did so.
Sequoia has different incentives than EA. By design investments have limited liability, and “companies should be leveraged and hold a linear utility curve” is a dominant concept in finance. FTX unethically using customer deposits would’ve broadly aligned with Sequoia’s interests so long as Sequoia retained the ability to distance themselves from legal and reputational damage.
Sequoia was incentivized to engage in a degree of wilful ignorance, and I would suspect they did so.