Temasek Holdings will write down its USD275 million (SGD376.8 million) investment in FTX, irrespective of the outcome of the cryptocurrency exchange’s bankruptcy protection filing.
This announcement released by the sovereign fund after FTX collapsed last week, sending shockwaves through the cryptocurrency industry.
Temasek had invested US$210 million in FTX International for a minority stake of about 1 per cent, and US$65 million for a minority stake of about 1.5 per cent in FTX US. This was across two funding rounds from October 2021 to January this year.
According to the Singapore state investment firm, the cost of Temasek’s investment in FTX was 0.09 per cent of its net portfolio value of S$403 billion as of Mar 31, 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 its statement.
“We will continue to remain prudent and exercise caution even as we explore opportunities that are aligned with our structural trends, to deliver sustainable returns over the long term for our overall portfolio.”
There have been “misperceptions” about its investment in FTX as an investment into cryptocurrencies, it was quoted as saying in the statement.
“To clarify, we currently have no direct exposure to cryptocurrencies,” said Temasek.
Temasek also addressed its assessment of FTX CEO 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,” the state investment firm said.
“We expect companies that we invest in to comply with their obligations under the laws and regulations of jurisdictions in which they have investments or operations, abide by sound corporate governance, and above all act ethically always.”
Temasek added that it is “supportive of the efforts of the regulators and the courts”, and encouraged the principals involved with FTX to cooperate for an “orderly resolution of outstanding matters”.
In its released statement, the statement investment firm explained its strategy on blockchain and the rationale behind its investment in FTX.
“The nascency of the blockchain and digital asset industry presents innumerable opportunities as well as significant risks.”
It closely tracks the risks involved and has taken a “calibrated two-pronged approach for exposure” in this space: Venture building and investing.
“Our venture building efforts have been focused on programmable money, digital assets tokenisation and decentralised identity and data.”
It also described innovative technologies such as blockchain technology as “enablers with the potential to transform sectors and create a more connected world”.
