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Singapore’s Temasek writes off US$275M in FTX

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Temasek International, Singapore’s state investment fund, is writing off US$275 million it had invested in the bankrupt crypto exchange FTX before its collapse, it announced in an official statement on Thursday.

“In view of FTX’s financial position, we have decided to write down our full investment in FTX, irrespective of the outcome of FTX’s bankruptcy protection filing,” Temasek wrote in the statement.

US$275 million is the total sum of Temasek’s US$210 million investment in FTX, and US$65 million in FTX US, its separately operated U.S. entity, which was made across two funding rounds from October 2021 to January 2022., once the world’s second-largest crypto exchange by volume and valued more than US$30 billion, filed for bankruptcy last week after struggling with a liquidity crunch. This sent an industry-wide shockwave that affected multiple players in the crypto space, including BlockFi, Genesis and AAX exchange.

The state investment fund also clarified that its investment in FTX did not involve any purchase of cryptocurrencies, and that it currently does not have any direct exposure in crypto.

See related article: Trezor, Ledger report surge in hard wallet sales amid FTX meltdown 

The cost of Temasek’s investment in FTX was 0.09% of its net portfolio value of about US$294 billion at the end of March this year. “This write down of our investment in FTX will not have significant impact on our overall performance,” Temasek wrote.

Temasek said that it conducted an extensive due diligence process on the fallen crypto exchange for eight months from February to October 2021 that focused on regulatory risk and compliance, but indicates that it did not expect the collapse and subsequent allegations on FTX.

“Reports have since surfaced that customer assets were mishandled and misused in FTX. If these statements are true, then this amounts to serious misconduct or fraud at FTX,” Temasek wrote. 

FTX reportedly used client funds worth at least US$4 billion to prop up its sister company and trading firm Alameda Research, which suffered multiple losses from deals. 

See related article: Who is exposed to FTX? A running compilation on a rapidly moving target

“It is apparent from this investment that perhaps our belief in the actions, judgment and leadership of Sam Bankman-Fried … would appear to have been misplaced,” the statement added.

Meanwhile, other participants in the funding round in which Temasek invested in FTX include Paradigm, SoftBank and Multicoin Capital.

“We feel deep regret for having invested in a founder and company who ultimately did not align with crypto’s values and who have done enormous damage to the ecosystem,” Matt Huang, cofounder and managing partner of Paradigm, wrote on Twitter Tuesday.

Japan-based investment conglomerate SoftBank also reportedly wrote down its investments in FTX, which totaled nearly US$100 million.

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