Temasek Holdings has announced plans to write off an investment in struggling crypto exchange FTX, saying its trust in disgraced founder Sam Bankman-Fried has been “misplaced”. The Singapore state-owned investment company participated in two funding rounds, with a total investment of $275 million.
It invested $210 million to buy a minority stake of about 1% in FTX International in October 2021, before spending another $65 million to buy a 1.5% in FTX US in January of this year. Collectively, crypto exchange investments represent 0.09% of a net portfolio value of S$403 billion ($293.52 billion), Temasek said in a statement on Thursday. .
Pointing to its belief that exchanges are an important component of the global financial system, it said: “The argument for our investment in FTX is to invest in an asset exchange. leading digital currency, providing us with protocol and market neutral exposure to the crypto market with a fee income model and no transaction or balance sheet risks. “
It noted, however, that its apparent belief in the “actions, judgment and leadership” of FTX’s now-disgraced founder and CEO, Sam Bankman-Fried was ” misplaced”.
Temasek said it carried out an “extensive” due diligence process on FTX, which lasted about eight months until the first investment in October 2021. This included a review of the financial statements that had been completed. audited exchanges as well as the regulatory risks associated with cryptocurrency financial market service providers.
Pointing to reports alleging FTX mishandling client assets, Temasek said it holds the companies it invests in accountable for their activities and obligations to comply with local laws.
The Singapore investment firm said it will continue to write off its entire investment in FTX due to FTX’s financial position and regardless of the outcome of the exchange’s filing for bankruptcy protection.
Temasek emphasized that they still believe in the potential of Blockchain application and decentralized technology to transform sectors, but note that the “nascent” of the blockchain and cryptocurrency industry presents significant risks alongside opportunities.
“There are inherent risks whenever we invest, divest or hold our assets and wherever we operate,” it said. “While a write-down of our investment in FTX will not have a significant impact on our overall performance, we take any investment loss seriously and will take our lessons from it. this.”
Temasek says their early-stage investments make up about 6% of their entire portfolio, with blockchain investments “not a significant part” of those investments. . It added that its investments here have been focused on Programmable moneytokenizes digital assets, decentralized identity and data, and includes blockchain technology infrastructure such as protocols, wallets, and metaverse.
Singapore’s central bank earlier this week said FTX is unlicensed and does not operate in the city-state. According to the Monetary Authority of Singapore (MAS), the exchange is also not exempt from the license, noting that it is not possible to prevent Singapore users from directly accessing foreign service providers, such as FTX.
In response to questions that the ban on Binance, which put it on the investor alert list, has caused local users to invest through FTX, MAS said that Binance is not banned from operating in Singapore, but does not have the necessary licenses. needed to attract customers. This means it must stop doing so, the industry regulator said.
Binance is closed its digital payment token offerings here in February 2022 and withdrew its efforts to secure a local license for its cryptocurrency exchange. Reports attributed the move to MA regulatory requirements, however, Binance has said that it will focus its Singapore operations on blockchain development.
In its statement this week, the MAS said digital payment token service providers have been licensed under the country’s Payment Services Act on money laundering as well as terrorist financing risks. Father. They are also regulated for technology risks, but not subject to rules that protect customer funds or digital tokens from insolvency, they added that they have repeatedly reminded remind the public about Risks when trading cryptocurrencies.
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