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Temasek Writes Down Its $275M Investment in Bankrupt FTX Exchange

UTC by Godfrey Benjamin · 3 min read
Temasek Writes Down Its $275M Investment in Bankrupt FTX Exchange
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Temasek clarified that its investment in FTX does not imply it has direct exposure to cryptocurrencies. 

Temasek, the Sovereign wealth fund of the Singaporean government has published a notice detailing its plans to write down the $275 million investment it injected into the now-bankrupt FTX Derivatives Exchange. Temasek said its investments into FTX were done across two rounds from October 2021 to January this year.

According to the update shared, it invested $210 million to take a 1% position in FTX International in the October round and approximately $65 million for a 1.5% stake in FTX US. According to the fund, all it wanted at the time was to back an entity with a viable product that can help provide exposure to the blockchain industry.

“We believe that exchanges form a key part of global financial systems,” the update reads, “the thesis for our investment in FTX was to invest in a leading digital asset exchange providing us with protocol agnostic and market neutral exposure to crypto markets with a fee income model and no trading or balance sheet risk.”

While the fund may be criticized for not doing its due diligence, it debunked this assumption, noting that it conducted full due diligence for the better part of 2021 but acknowledged that it is impossible to estimate all possible risks at the time.

Temasek also clarified that its investment in FTX does not imply it has direct exposure to cryptocurrencies.

“There have been misperceptions that our investment in FTX is an investment into cryptocurrencies. To clarify, we currently have no direct exposure in cryptocurrencies,” said.

Beyond Temasek, Other Investors Marking Down Their FTX Investments

That the crypto trading platform led by its former founder and Chief Executive Officer, Sam Bankman-Fried disappointed a lot of investors is an understatement. In light of current realities, other investors beyond Temasek are also taking a cost-effective approach of marking down their investments in FTX and its subsidiaries.

One major investor who has also trailed this path is Sequoia Capital which wrote down the $213.5 million it injected into the company and its subsidiaries. Softbank may also join the train as well as other top investors who backed the beleaguered trading platform in both its early and late growth stages.

Despite the failed investments in FTX, Temasek has acknowledged that its losses are not so significant when the lost fund is compared to its total assets under management pegged at $294 billion. Temasek said the $275 million it wrote down represents just about 0.09% of its total portfolio.

In all, Temasek said it still recognizes the potential of blockchain technology and by reason of recent events, that the risks are still quite significant.

“We continue to recognize the potential of blockchain applications and decentralized technologies to transform sectors and create a more connected world. But recent events have demonstrated what we have identified previously – the nascency of the blockchain and crypto industry and the innumerable opportunities as well as significant risks involved,” the company said.

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