On the one hand, sure, but on the other hand, this was literally a case of fraud. A fraudulent business is going to go out of its way to hide the fact that it's committing fraud.
I agree that fraud trumps due diligence. You can do your diligence all you want but a fraudster can thing of a million ways to hide the truth, offer up forged/faked documents, etc. But due diligence is just that - you check out at least what is properly due - do they keep books, are they properly audited, do they have a proper board of directors, etc. It's evident Sequoia did none of that. SBF's balance sheet at the time this all thing went down was a spreadsheet that looked like it was made by a kid with no financial training which it was. Their corporate and financial controls were so lacking its insane that anyone gave them money. But Sequoia did and did so with what appears to be no substantive due diligence, other than being swept up by SBF saying exactly what they wanted to hear.
You do know that due diligence involves going over financial records correct? I imagine they didn't look at anything given the sheet SBF was shopping during the collapse.
There's a level of wilful ignorance here. If you "invest" in a business because line goes up and you don't ask why or how, and it turns out the why and how was crime, well, maybe you were just a rube, but maybe you figured out that it wasn't in your interest to ask too many questions. When we're talking about a sophisticated top VC fund...
