Temasek-backed crypto company Amber Group rumored next to fall but company says it’s “business as usual”

Temasek-backed crypto company Amber Group rumored next to fall but company says it’s “business as usual”

It was earlier reported that the co-founder of cryptocurrency company Amber Group, Tiantian Kullander, was found dead in his sleep last month (23 Nov 2022), 9 months after Singapore’s Temasek Holdings invested in it.

Mr Kullander was only 30 years old. Details surrounding Kullander’s deatteh were unavailable except that he died in his sleep.

In February this year, Temasek was among the investors in a funding round that valued the cryptocurrency-trading and lending platform Amber at US$3 billion.

A total of US$200 million was raised. Amber was very keen to take up Temasek’s investment. It even extended its funding round, originally announced in June last year, to this year specifically to bring Temasek on board as an investor.

“They (Temasek) are very strategic, so we made this special effort to bring them in,” a company spokesperson said.

More Activity Of Investing By Temasek Over The Past Years

Temasek has been actively dabbling in crypto investments lately.

Mr Anthony Lewis, Director of Crypto & blockchain venture building & investing in Temasek, said at a forum on 19 July this year that it has invested directly into “single names”.

“So the ones that we’ve disclosed FTX and FTX US and Immutable from Australia, Consensus and Amber. So we continue to invest in single names, we continue to invest in funds through the cycle,” said Mr Lewis, who has been with Temasek since March 2020.

He added, “In fact, there’s never been more activity. We are pretty active now. The team is scaled up. We have the investing team. We also work with other teams in the organisation.”

This was just before Temasek wrote down US$275 million on 17 November due to a bad investment in the now-defunct cryptocurrency exchange FTX.

When FTX went bankrupt, Temasek blamed misplaced belief in the FTX founder for its failed investment.

Later, Mdm Ho Ching, wife of Singapore’s Prime Minister Lee Hsien Loong, broke her silence over the US$275 write-off saying, “And Temasek can afford to be contrarian bcos it has its own balance sheet and can think long term.”

Social media vibes surrounding the controversy of Temasek’s bad investment in FTX would later force Deputy Prime Minister Lawrence Wong to announce in Parliament that Temasek has initiated an internal review over the FTX fiasco.

However, it would be conducted by Temasek’s own staff on the decision to invest in FTX.

Amber Group Denies Going Under

Following the fall of FTX, Bloomberg reported on Friday (9 Dec 2022) that Amber is cutting hundreds of jobs, scrapping retail operations and terminating a sponsorship deal with Chelsea Football Club. The company said it was part of a “major cost-cutting” strategy.

The moves by Amber are just the latest indication of the diminished outlook for virtual crypto assets following the spectacular fall of FTX.

A source told Bloomberg that with its exit from the retail sector, the customer numbers in Amber would fall from the hundreds of thousands to about 100, as it will be focusing only on institutional customers.

In recent days, however, Amber has been busy rebutting online speculation that it may be the next to fall after a series of blow-ups in the crypto sector, which is reeling from a US$2 trillion rout. Publicly, the company said that it is conducting “business as usual”.

SCMP also reported that Amber’s employees in Shenzhen have been unable to collect their severance after being laid off last month, about the time of Kullander’s death.

When some of them attempted to inquire about their compensation on WeChat, their messages either went unanswered or resulted in them being blocked by human resources and CEO Michael Wu, who is another co-founder of the company. SCMP reported that some of the disgruntled Chinese staff have called the police.

The company’s troubles came to light in the days after the sudden demise of Kullander.

Soon, rumors of Amber also going under came after Web3 analysis provider Lookonchain reported earlier this week that there had been recent large transfers from Amber to outside accounts and that the group had assets of just US$9.46 million, based on a review of public blockchain records.

Lookonchain alleged that there were significant discrepancies between wallets owned by Amber and the reported funds and trading volumes.

When Financial Times (FT) approached Amber’s managing partner, Annabelle Huang, who is based in Singapore, about the allegations by Lookonchain, Ms Huang said much of its business took place in private. Still, FT did confirm that Amber had been an active trader on FTX and had experienced delays in getting its withdrawals processed. But Ms Huang said less than 10 percent of its trading capital was stuck on FTX.

Nevertheless, crypto-focused hedge fund managers said they believed Amber took a significant hit from the collapse of FTX and popular crypto token Luna this year. “We all know that Amber got burnt pretty hard especially on FTX,” one manager told FT. Amber has previously co-invested in crypto companies alongside Alameda Research, the fund linked to FTX.

Prior to these recent troubles, Amber was looking rosy to investors. CEO Michael Wu even told everyone last Sep that the company was going public this year or next year.

But with the recent troubles encountered by Amber and together with the sudden unexplained death of co-founder Kullander, the possibility of going public appears remote.

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