Cryptocurrency

Investment Fund Temasek Victim of FTX Bankruptcy

In a formal statement released on Thursday, Temasek International, the public investment fund of Singapore, stated that it was writing down US$275 million it had invested in the defunct cryptocurrency exchange FTX before it shut down.

Regardless of the outcome of FTX’s request for bankruptcy protection, Temasek stated in the statement that it had “decided to write down its complete stake in FTX in light of the company’s financial situation.

Temasek invested a total of US$275 million in FTX over the course of two capital rounds from October 2021 to January 2022, including US$210 million in FTX and US$65 million in FTX US, a separately managed corporation in the United States.

After experiencing a liquidity crisis, FTX.com, once the second-largest cryptocurrency exchange in the world by volume and valued at more than US$30 billion, filed for bankruptcy last week. This caused shockwaves across the whole sector, affecting many participants in the cryptocurrency space, such as BlockFi, Genesis, and AAX exchange.

The state investment fund further stated that it presently has no direct exposure to cryptocurrencies and that its investment in FTX did not involve the purchase of any cryptocurrency.

Temasek’s stake in FTX cost it 0.09% of its net portfolio value, which was approximately US$294 billion at the end of March. Temasek said that the write-down of its investment in FTX would not significantly affect its overall performance.

Temasek claimed to have spent eight months, from February to October 2021, conducting a thorough investigation into the defunct cryptocurrency exchange with a focus on regulatory risk and compliance, but it appears that Temasek did not anticipate the exchange’s demise and the allegations that followed regarding FTX.

Since then, there have been reports of improper handling and abuse of consumer assets in FTX. If these claims are accurate, FTX has engaged in serious misconduct or fraud, Temasek stated.

According to reports, FTX utilized customer funds worth at least $4 billion to support Alameda Research, a sister company and trading firm that experienced numerous deal losses.

The statement continued, “It is evident from this investment that possibly our belief in the actions, judgment, and leadership of Sam Bankman-Fried… appears to have been misguided.”

Paradigm, SoftBank, and Multicoin Capital are among the other partners in the investment round in which Temasek invested in FTX.

Matt Huang, co-founder and managing partner of Paradigm, remarked on Twitter on Tuesday, “We feel tremendous sorrow for having invested in a founder and firm that ultimately did not match with crypto’s ideals and who have done enormous damage to the ecosystem.”

TheCoinRepublic reported earlier that the Japanese investment giant SoftBank wrote down its almost $100 million worth of stakes in FTX.

Nancy J. Allen
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