entire US$275 million investment in FTX, becoming the single biggest victim to date in the collapse of the world’s second-largest cryptocurrency exchange, which has so far
claimed the fortunes of millions of individual traders and the most established professional investors.
“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,” Temasek wrote in a statement on Thursday, referring to the 30-year-old founder and former chief executive of FTX.
Temasek, which put in US$210 million in FTX International and US$65 million in FTX US from October last year to February this year, said it decided to write down its total investment “irrespective of the outcome of FTX’s bankruptcy protection filing”.
The state-owned investment firm said that it currently has “no direct exposure in cryptocurrencies” beyond the equity in FTX. It added that the FTX investment accounted for only 0.09 per cent of Temasek’s net portfolio value of S$403 billion (US$294.1 billion) as of March 31.
The US$275 million write-down by Temasek dwarfs the US$90 million accumulated investment losses by the Singapore government at the Suzhou Industrial Park, in eastern China’s Jiangsu province, in the six years that ended in 2000.
Temasek is among a range of established institutions around the world that poured money into FTX from 2021, sending the crypto exchange’s valuation up to US$32 billion in February this year. These include Sequoia Capital, Tiger Global, Japan’s SoftBank Group Corp and the Ontario Teachers Pension Plan.
The action taken by Temasek reflects how major investors were caught off guard by FTX’s swift downward spiral last week and how they are now moving to distance themselves from the failed crypto company.
Following FTX’s filing of a Chapter 11 bankruptcy petition in the United States last Friday, Sequoia Capital marked down its US$150 million investment to zero. SoftBank also moved to write down its nearly US$100 million investment in the collapsed cryptocurrency exchange.
Fear of a contagion is now spreading across the global cryptocurrency market, as more platforms find themselves running into trouble after FTX’s meltdown.
Digital asset lender BlockFi, which received a US$250 million bailout from FTX in June, said in a statement on its website on November 15 that it “could no longer operate our business as usual”, but asserted that it was “working around the clock to evaluate all of our available options”.
Genesis Trading, another crypto lender, said that it will “suspend redemptions and new loan originations” because FTX created “unprecedented market turmoil”, which has led to “abnormal withdrawal requests” that exceeded its liquidity.
Hbit, a subsidiary of Huobi Global-affiliated New Huo Technology, is now unable to withdraw US$18.1 million worth of cryptocurrencies deposited in the bankrupt FTX.
Hong Kong-based exchange AAX on Tuesday said that it has suspended withdrawals, citing “abnormalities” in their system after FTX’s collapse, and that it needs to raise more capital.
A number of institutional investors in Hong Kong said they have suffered less damage from FTX’s collapse, compared with some small exchanges, thanks to the city’s cautious approach towards the cryptocurrency market.
Meanwhile, American and Bahamian authorities have been discussing the possibility of bringing Bankman-Fried to the US for questioning, according to a Bloomberg report.
