Temasek Holdings, Singapore’s state-owned investor, has decided to write down its investment in FTX, amounting to $275M.
According to the statement they published on the 17th of November, Temasek invested $210M for a 1% stake in FTX international and $65M for a 1.5% stake in FTX US. Their total investment in FTX entities amounted to 0.09% of their net portfolio value of S$403B as of 31 March 2022.
Temasek is one of several institutions’ backers who got hit by the fall of the cryptocurrency exchange FTX.
Among the many others, another backer, Sequoia Capital, has written down its total value of a $214M stake in the exchange.
While the series of events was kickstarted with Alameda’s balance sheet being leaked by CoinDesk, many questions of due diligence started to raise eyebrows after FTX filed for bankruptcy earlier this week.
Also, read the Signs The FTX Crash Was Bound To Happen
The statement made by Temasek reminded the public that their investment discipline is “centred around intrinsic value and our risk-return framework.”
Their due diligence process took eight months, from February to October 2021. During this time, they “reviewed FTX’s audited financial statement, which showed it to be profitable” and “recognize that while our due diligence processes may mitigate certain risks, it is not practicable to eliminate all risks.”
Additional due diligence efforts were also allocated to look into regulatory risk with crypto financial market service providers and cybersecurity. Furthermore, Temasek gathered qualitative feedback on FTX and interviewed individuals familiar with the company.
“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 the same statement.
Temasek further added that reports have surfaced that customer assets were mishandled and misused in FTX, which, if true, will result in severe misconduct or fraud.
The road ahead
Temasek also seems to walk away from the FTX debacle unscathed.
“This write-down of our investment in FTX will not significantly impact our overall performance.”
As the Singapore investment arm continues to recognize the potential of blockchain applications, they acknowledge the risk that comes with it.
To date, Temasek participated in a funding round for Metaverse company Animoca Brands in August 2022 and backed Amber group in their series B funding round.
Temasek also clarified that it currently has no direct exposure to cryptocurrencies but instead invests in building blockchain ecosystems.
While Temasek seems to put this matter to bed, declaring the write-off in their investment with FTX, chatters on Twitter shed light on an unusual coincidence.
Last year in December, Binance said it would close its digital token exchange serving Singapore users. Since then, Singapore users can no longer deposit fiat currencies or perform spot trades on Binance.
This left Singaporeans to turn towards FTX as a cryptocurrency exchange alternative.
Could this be a coincidence or orchestrated? We will never know, but Binance’s decision to exit the Singapore market may be strange, especially when the due diligence process on FTX was completed two months earlier, in October 2021.
A few months before the FTX meltdown, Tharman Shanmugaratnam, chairman of the Monetary Authority of Singapore (MAS), talked about how cryptocurrency is “certainly not suitable for retail investors” and dishing out new proposals on new crypto regulations for investors.
At the same time, their completion of “project Orchid” at the end of October 2022 details the digitalization and exploration of CBDCs with the Singapore dollar.
[Editor’s Note: This article does not represent financial advice. Please do your research before investing.]
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