Singapore’s Temasek to write down its $275M FTX investment to $0

Lavina Daryanani
Source: The Economic Times

Entities around the world continue to distance themselves from bankrupt crypto exchange company FTX. Exactly a week back, the Sequoia Capital team announced that they were completely writing down the value of their holdings in FTX. In a letter to investors, Sequoia attributed FTX’s “liquidity crunch” and “solvency risk” as reasons for their action.

Now, in what is the latest development, Singapore’s state investment fund—Temasek—is preparing to write off its entire $275 million that it invested in the crypto exchange.

Notably, Temasek invested $210 million for a minority stake of ~1% in FTX International, and invested $65 million for a minority stake of ~1.5% in FTX US, across two funding rounds from October 2021 to January 2022. The official statement released noted,

In view of FTX’s financial position, we have decided to write down our full investment in FTX, irrespective of the outcome of FTX’s bankruptcy protection filing.

Also Read: Sequoia Capital marks down its FTX stake to $0

Temasek’s belief in FTX, SBF ‘misplaced’?

Like their other investments, Temasek conducted an extensive “due diligence process” on FTX. The same spanned for around eight months—from February to October last year. The statement claimed that during that time, they reviewed the exchange’s audited financial statement, which showed it to be “profitable.” Alongside, they gathered feedback on the company and management team by conducting interviews with people familiar with the company.

We recognise that while our due diligence processes may mitigate certain risks, it is not practicable to eliminate all risks.

The exchange is currently under the scrutiny of several regulatory agencies around the world for mishandling and misusing customer assets. Temasek said that if the allegations were true, it would amount to “serious misconduct or fraud.” The statement further added,

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.