Sovereign wealth fund of Singapore, Temasek Holdings, announced that it will take full responsibility for the $275 million investment loss incurred from FTX, a now-defunct cryptocurrency exchange, in an effort to demonstrate “collective accountability.” Temasek was the second-largest external investor in FTX, holding 7 million shares at the time of the exchange’s collapse, which raised questions about their investment choices.
Following the incident, Temasek released a statement on Monday, revealing that the FTX incident included fraudulent conduct that Temasek itself was not aware of, and emphasizing the need for transparency and protection of shareholders. Temasek immediately recognized a total loss amounting to $275M, which it wrote off. This total package included a $210M investment for a 1% stake in FTX International, and a $65M investment in FTX.US for a 1.5% stake. This only accounted for 0.09% of Temasek’s net portfolio value, which stood at $293.5B (SGD 403B) the previous year.
Before investing in FTX, Temasek conducted an eight-month due diligence process, conducting reviews of various aspects, including financial statements, regulatory risks, and cybersecurity. This incident prompted Temasek to consider enhancing its investment appraisal, particularly for fast-growing firms, while proceeding with caution while investing in the blockchain sector.
Temasek exclusively invested in FTX among cryptocurrency exchange options and served Singaporean users at its peak, unlike competing firm Binance, which faced significant restrictions.
Temasek’s experience with the FTX’s collapse highlights the risks and challenges associated with investing in the volatile cryptocurrency space, and it emphasizes the significance of thorough due diligence and cautious decision making, even for established institutional investors.
Compiled by Coinbold
