Business
Temasek Holdings to write down its entire investment of US$275m into FTX
SINGAPORE — Temasek Holdings will write down the US$275 million investment made into FTX in view of the financial position of the cryptocurrency exchange, irrespective of the outcome of FTX’s bankruptcy protection filing.
This was said on Thursday (17 Nov) by the Singapore sovereign wealth fund via a statement posted on its website.
This comes after a week after FTX announced last Friday that it had filed for US’ Chapter 11 bankruptcy proceedings, following the collapse of a bailout deal by the world’s biggest cryptocurrency platform Binance.
In its statement, Temasek said that it invested US$210 million in FTX International for a minority stake of about 1 per cent, and US$65 million for a minority stake of about 1.5 per cent in FTX US.
It said that the cost of its investment in FTX was 0.09% of its net portfolio value of S$403 billion as of 31 March 2022.
It also noted that there have been misperceptions that its investment in FTX is an investment into cryptocurrencies.
“To clarify, we currently have no direct exposure in cryptocurrencies.” said Temasek.
Temasek noted that the thesis for its investment in FTX was to invest in a leading digital asset exchange providing it with protocol agnostic and market neutral exposure to crypto markets with a fee income model and no trading or balance sheet risk.
In regards to its due diligence prior to the investment into FTX, Temasek said it had reviewed FTX’s audited financial statement in a process which took approximately 8 months from February to October 2021, which showed it to be profitable.
It added that its due diligence efforts were focused on the associated regulatory risk with crypto financial market service providers, particularly licensing and regulatory compliance (i.e. financial regulations, licensing, anti-money laundering (AML)/ Know Your Customer (KYC), sanctions) and cybersecurity.
“We recognise that while our due diligence processes may mitigate certain risks, it is not practicable to eliminate all risks.” said Temasek.
Temasek also noted that its belief in the actions, judgment and leadership of Sam Bankman-Fried, “formed from our interactions with him and views expressed in our discussions with others”, would appear to have been misplaced.
It said, “We expect companies that we invest in to comply with their obligations under the laws and regulations of jurisdictions in which they have investments or operations; abide by sound corporate governance; and above all act ethically always.”
“As we only had a ~1% stake in FTX, we did not have a board seat. However, we take corporate governance seriously, engage the boards and management of our investee companies regularly and hold them accountable for the activities of their companies.”
While Temasek claims that its US$275 million investment was made across 2 funding rounds from October 2021 to January 2022, FTX itself said in a press statement in October 2021 that Temasek had participated in the previously announced Series B in July 2021 along with the Series B-1 fundraiser held in October 2021.
Did FTX make a wrong statement about Temasek’s investment and if so, why was this never corrected by Temasek?
