Singapore’s state-owned investment fund Temasek has decided to writedown a US$275mln investment into Sam Bankman-Fried’s collapsed cryptocurrency exchange FTX.
With nearly US$300bn in assets under management, Temasek’s FTX investment comprised only a fraction of the fund’s portfolio, yet the write down, which could be the largest among institutional investments into FTX, speaks to the failure of major firms to notice red flags in the company.
Despite an eight-month process, Temasek’s due diligence into the exchange “showed it to be profitable”.
“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,” Temasek wrote in a statement.
Temasek added: “There have been misperceptions that our investment in FTX is an investment into cryptocurrencies. To clarify, we currently have no direct exposure in cryptocurrencies.”
“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,” said the fund.
Industry reckons with FTX fallout
FTX filed for bankruptcy protection on November 11 amid an orgy of insider trading and frontrunning accusations, evidence of billions in misappropriated user funds, and proof of systemic fraud.
Up to one million creditors are believed to be involved in the Chapter 11 proceedings, while fallout from the collapse has caused untold damage to the broader cryptocurrency market.
Among the creditors facing heavy losses are a number of high-profile celebrities including American football star Tom Brady and his supermodel ex-wife Gisele Bündchen.
Another backer, Sequoia Capital, wrote off its US$214mln FTX investment, while Japan’s SoftBank group is expected to lose up to US$100mln.
Once the dust settles, the market will have to assess just how SBF managed to fool almost every player in the crypto market.