Singapore’s sovereign wealth fund Temasek Holdings has written off its entire investment in cryptocurrency exchange FTX irrespective of the outcome of the US-based company’s bankruptcy protection filing.
Temasek invested US$275 million in FTX International and FTX US across two funding rounds from October 2021 to January 2022. This comprises US$210 million for 1 per cent in FTX International and US$65 million for 1.5 per cent in FTX US.
In an updated statement issued on November 26, the VC firm said the write-down would not impact its overall performance as it is just 0.09 per cent of its net portfolio value of SG$403 (US$293) billion as of March 31 2022.
“Similar to all investments, we conducted an extensive due diligence process on FTX, which took approximately 8 months from February to October 2021. During this time, we reviewed FTX’s audited financial statement, which showed it to be profitable,” it said.
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The due diligence efforts 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/know your customer, sanctions, and cybersecurity.
“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. All of this is currently being investigated by the regulators,” Temsek said.
Temasek also clarified that its investment in FTX was not an investment in cryptocurrencies and currently has no direct exposure to cryptocurrencies.
“The thesis for our investment in FTX was to invest in a leading digital asset exchange providing us with protocol agnostic and market neutral exposure to crypto markets with a fee income model and no trading or balance sheet risk,” it said.
Temasek’s announcement comes a few days after Sequoia Capital decided to write down the full value of its US$214 million bet on FTX. SoftBank, another high-profile FTX backer, said it anticipates an investment loss of around US$100 million. FTX’s other investors include BlackRock, Tiger Global, Insight Partners and Paradigm.
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