Singapore’s Temasek writes off $275 mln FTX investment

Singapore state fund Temasek said on Thursday that it plans to write down the entirety of its investment in FTX after the beleaguered crypto exchange recently filed for bankruptcy amid allegations that it mishandled customer funds.

The firm said it invested $210 million for a 1% stake in FTX International and $65 million for a 1.5% stake in FTX US across two funding rounds between October 2021 and January 2022. The investment accounted for about 0.09% of the fund’s total portfolio, worth about S$403 billion ($1 = 1.3733 S$) as of Mar 31, 2022.

Temasek’s writedown follows similar moves by other major investors in FTX, with Softbank’s Vision Fund and Sequoia Capital both writing down their multi-million dollar investments in the exchange.

The fund said the writedown was not contingent on the outcome of FTX’s bankruptcy proceedings, and will not have a “significant impact” on its performance. The fund also said it had no direct exposure to cryptocurrencies.

Temasek said that it still believed in the potential of blockchain technology, and that its investment in FTX was after months of due diligence that involved looking at FTX’s books, and also studying regulatory risks to crypto.

“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 in a statement.

FTX, which was formerly led by Bankman-Fried, filed for U.S. bankruptcy protection this week after the firm faced a severe liquidity crisis earlier this month. This was triggered by customers racing to withdraw their holdings after allegations arose that the exchange funneled customer funds into Bankman-Fried’s crypto hedge fund Alameda Research.

The event triggered a widespread crash in the crypto market, pushing Bitcoin to two-year lows and total market capitalization well below the $1 trillion mark.

Both FTX and Bankman-Fried now face several consumer lawsuits, as well as regulatory investigations. Crypto markets are also fearing a broader contagion from FTX’s collapse.