Singapore's Temasek writes down entire $275m investment in FTX

Singapore's Temasek writes down entire $275m investment in FTX

FILE PHOTO: Representations of cryptocurrencies are seen in front of displayed FTX logo and decreasing stock graph in this illustration taken November 10, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

Editor’s note: This story was updated on Nov 17 after Temasek issued a statement on the writedown. A previous version referred to news reports on the development.

Singapore state investor Temasek Holdings on Thursday said it is writing down its entire $275 million investment in embattled crypto exchange FTX.

“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,” the investor said in a statement.

FTX, one of the world’s biggest crypto exchanges, filed for bankruptcy protection in the US last week after speculation over its financial health saw customers withdraw a reported $6 billion from the platform in 72 hours.

In its statement on Thursday, Temasek said it invested $210 million for a minority stake of about 1% in FTX International and $65 million for a minority stake of about 1.5% in FTX US from October 2021 and January 2022.

“The cost of our investment in FTX was 0.09% of our net portfolio value of S$403 billion as of 31 March 2022,” it added.

The move by the Singapore investor follows a series of similar writedowns by other FTX investors, including Sequoia Capital, SoftBank Group and, more recently, US crypto investment firm Paradigm.

Paradigm’s co-founder Matt Huang tweeted on Tuesday expressing “deep regret” for investing in a founder and company that did not align with its crypto values, and did “enormous damage” to the ecosystem. He added that Paradigm’s equity investment in FTX comprised a small part of its total assets and has been written down to $0.

FTX’s swift blowup appears to be leaving a varying impact on its shareholders.

For institutional investors such as Temasek and Canada’s Ontario Teachers Pension Plan (OTPP), the damage has been limited due to the relative size of their portfolio. OTPP, Canada’s third largest pension fund, made investments in FTX International and FTX US exchange amounting to $95 million, comprising less than 0.05% of the pension fund’s total net assets.

Others were less fortunate. Last week, crypto hedge fund Galois Capital admitted that around $40 million or half of its assets were trapped in FTX, adding that it could take “a few years” for it to recover its assets. Other investors on FTX’s cap table include Tiger Global, Sea Capital, and Coinbase Ventures.

FTX has filed for bankruptcy, while its chief executive officer Sam Bankman-Fried has stepped down. Industry stakeholders are now bracing themselves for a rough time for the sector as ripple effects from its collapse continue to unfold in the market.

“The coming weeks and months will be a tough time for crypto, but we remain optimistic about crypto’s potential and are committed to building towards the positive future we know it can enable,” wrote Paradigm’s Matt Huang in a tweet on Tuesday.

This has already led to a lowering of valuation asks among crypto majors like Amber Group, which is reportedly seeking a $3 billion valuation versus $10 billion recently in May, according to Bloomberg.

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