As the recent failure of major exchange FTX continues to wreak havoc on cryptocurrency markets around the world, the state-run fund Temasek in Singapore has made the decision to write down the $275 million investment that was made into the failed cryptocurrency exchange.
According to a statement released by Temasek, “We invested US$210 million for a minority stake of 1% in FTX International, and we invested US$65 million for a minority stake of 1.5% in FTX US.” These investments were made during two separate funding rounds that spanned the time period from October 2021 to January 2022. “In light of FTX’s current financial situation, we have made the decision to write down our entire investment in FTX. This decision will stand regardless of the outcome of FTX’s application for bankruptcy protection,”
We are of the opinion that exchanges are an essential component of worldwide monetary systems. According to the Singaporean entity, “the thesis for our investment in FTX was to invest in a leading digital asset exchange that would provide us with protocol agnostic and market neutral exposure to crypto markets along with a fee income model and no trading or balance sheet risk.” FTX is a digital asset exchange that is market neutral and provides exposure to cryptocurrency markets.
Temasek estimates that the value of the fund’s portfolio of investments is as high as S$403 billion ($293.5 billion). Given this information, it is highly unlikely that the most recent event will have a significant effect on the fund’s operations.
According to the statement, “The cost of our investment in FTX was 0.09% of our net portfolio value of S$403 billion as of 31 March 2022.” This information was found in the document.
While this was going on, Temasek stated that its investment in FTX was not a part of a larger strategy to increase the fund’s exposure to cryptocurrency.
“It has come to our attention that some people are under the mistaken impression that our investment in FTX constitutes an investment in cryptocurrencies. “To be clear, we do not directly have any exposure to cryptocurrencies at this time,” the entity stated.
Temasek also stated that, similar to the way it handles its other investments, “we conducted an extensive due diligence process on FTX,” which lasted approximately eight months, beginning in February 2021 and ending in October 2021. During this time, we looked over the audited financial statement for FTX, which revealed that the company was making a profit.
According to this, the Singaporean organization admitted that the decision that it made to entrust the money of the fund to a company that was managed by Sam Bankman-Fried was not based on an accurate evaluation of the motivations that were driving the founder of FTX.
Temasek stated that “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.” “It is apparent from this investment that perhaps our belief in the actions, judgment, and leadership of Sam Bankman-Fried was perhaps misplaced.”
Compiled by Coinbold