(Singapore, 17/11/2022) Temasek Holdings said that it will write down its USD275 million (S$376.8 million) investment in FTX, irrespective of the outcome of the cryptocurrency exchange’s bankruptcy protection filing.
Temasek’s announcement comes after FTX collapsed last week, sending shockwaves through the cryptocurrency industry.
In a statement issued early on Thursday (Nov 17), Temasek said the total cost of its investment in FTX was 0.09% of its net portfolio value of $403 billion as at 31 March 2022.
It invested USD 210 million for a minority stake of about 1% in FTX International, and invested USD 65 million for a minority stake of about 1.5% in FTX US, which is the American subsidiary. These investments were carried out across two funding rounds from October 2021 to January 2022.
“There are inherent risks whenever we invest, divest, or hold our assets, and wherever we operate. While this write down of our investment in FTX will not have significant impact on our overall performance, we treat any investment losses seriously and there will be learnings for us from this”, Temasek said in the statement published on its website.
Temasek also addressed its assessment of FTX founder Sam Bankman-Fried.
“It is apparent from this investment that perhaps our 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,” Temasek said.
Temasek added that there have been misperceptions that our investment in FTX is an investment into cryptocurrencies. “ To clarify, we currently have no direct exposure in cryptocurrencies.”
Temasek said that similar to all investments, it “conducted an extensive due diligence process on FTX”, which took about eight months from February to October 2021.
During this period, it reviewed the company’s audited financial statement, which showed it to be profitable. In addition, its due diligence efforts focused on the associated regulatory risk with crypto financial market service providers, particularly licensing and regulatory compliance and cybersecurity, Temasek said, adding that “advice from external legal and cybersecurity specialists in key jurisdictions was sought, with legal and regulatory review done for the investments.”
“Separately, we also gathered qualitative feedback on the company and management team based on interviews with people familiar with the company, including employees, industry participants and other investors,” it said.
The Singapore state investment firm said that it will continue to remain prudent and exercise caution even as it explore opportunities that are aligned with its structural trends, to deliver sustainable returns over the long term for our overall portfolio.