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Temasek will write down US$275 million in FTX

Regardless of the outcome of FTX’s request for bankruptcy protection, Temasek Holdings announced on Thursday (Nov. 17) that it will write down its US$275 million (S$376.8 million) investment in the cryptocurrency exchange.

After FTX’s collapse last week, which rocked the cryptocurrency sector, Temasek made its announcement. According to a statement on its website, Temasek invested US$210 million for an approximate 1% minority investment in FTX International and US$65 million for an approximate 1.5% minority stake in FTX US. The two investment rounds covered the period from October 2021 to January of this year.

According to Temasek, the cost of their investment in FTX was 0.09 percent of its net portfolio value of S$403 billion as of Mar. 31, 2022. Temasek stated in its statement, “In light of FTX’s financial circumstances, we have chosen to write down our complete investment in FTX, irrespective of the outcome of FTX’s bankruptcy protection case. While this write down of our investment in FTX will not have a material impact on our overall performance, we treat any investment losses seriously and there will be lessons for us from this. There are inherent risks anytime we invest, divest or keep our assets, and everywhere we operate.

To provide sustainable returns over the long run for the entire portfolio, Temasek added, “we will continue to stay careful and exercise caution even as we investigate opportunities that are aligned with our fundamental trends.” It further stated that there have been “misperceptions” regarding its investment in FTX as a cryptocurrency venture. To be clear, Temasek added, “We currently have no direct exposure to cryptocurrencies.

The state investment company also discussed its evaluation of Sam Bankman-Fried, the founder of FTX. According to this investment, perhaps our trust in Sam Bankman-conduct, Fried’s judgement, and leadership—beliefs derived from our contacts with him and opinions shared in conversations with others—was incorrect, according to Temasek. “We expect the firms we invest in to uphold solid corporate governance, operate ethically at all times, and comply with their duties under the laws and regulations of the jurisdictions in which they have investments or operations.”

Temasek further stated that it “supports the efforts of the regulators and the courts” and urged the FTX leaders to work together for an “orderly resolution of pending concerns.”