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Temasek Writes Off $275M FTX Investment, “Irrespective of the Outcome”

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Temasek is writing off $US275 million investment into cryptocurrency platform FTX International & FTX US.

Temasek has decided to write off their “full investment in FTX, irrespective of the outcome of FTX’s bankruptcy protection filing.”

Their investments into the cryptocurrency exchange make up for US$210 million for a minority stake of ~1% into FTX International and US$65 million for a minority stake of ~1.5% in FTX US. This was across 2 funding rounds from October 2021 to January.

Temasek had invested in FTX in its Series B, Series B extension, and Series C funding rounds in October last year, when the exchanged raised US$1 billion, US$420 million, and US$400 million respectively. In January, FTX was valued at US$32 billion. Temasek is the third-largest investor in FTX.

“The cost of our investment in FTX was 0.09% of our net portfolio value of S$403 billion as of 31 March 2022,” they said in a statement.

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“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.”

“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.”

Clarifying they “only had a ~1% stake in FTX”, Temasek said they did not have a board seat. “However, we take corporate governance seriously, engage the boards and management of our investee companies regularly and hold them accountable for the activities of their companies,” they said.

Temasek also said they conducted the necessary due diligence and post investment engagements to monitor their investments strategies and performance. However they admitted that their processes was not practicable to eliminate all risk.

“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.”

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Temasek added they are “supportive of the efforts of the regulators and the courts, and encourage the principals involved with FTX to cooperate for an orderly resolution of outstanding matters.”

They concluded that they will “continue to recognise the potential of blockchain applications and decentralised technologies to transform sectors and create a more connected world” but also acknowledged “the nascency of the blockchain and crypto industry and the innumerable opportunities as well as significant risks involved.”

“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.”