Singapore state investment firm to write down $275M in FTX

Temasek Holdings has introduced plans to jot down down its funding in troubled cryptocurrency alternate FTX, saying its perception in disgraced founder Sam Bankman-Fried was “misplaced”. The Singapore state-owned funding agency had participated in two funding rounds, totalling $275 million in funding.

It invested $210 million for a minority stake of about 1% in FTX Worldwide in October 2021, earlier than forking out one other $65 million for 1.5% in FTX US in January this yr. Collectively, its investments within the cryptocurrency alternate accounted for 0,09% of its web portfolio worth of SG$403 billion ($293.52 billion), Temasek mentioned in a press release Thursday.

Pointing to its perception that exchanges had been a key element of world monetary techniques, it mentioned: “The thesis for our funding in FTX was to spend money on a number one digital asset alternate, offering us with protocol agnostic and market impartial publicity to crypto markets with a charge earnings mannequin and no buying and selling or stability sheet danger.”

It famous, nonetheless, that it had change into obvious its perception within the “actions, judgement, and management” of FTX’s now-disgraced founder and CEO Sam Bankman-Fried was “misplaced”.

Temasek mentioned it ran an “intensive” due diligence course of on FTX that spanned some eight months by way of to its first funding in October 2021. This included a evaluate of the alternate’s audited monetary assertion in addition to regulatory dangers related to crypto monetary market service suppliers.

Pointing to reviews that alleged FTX mishandled buyer property, Temasek mentioned it held corporations during which it invested accountable for his or her actions and obligation to adjust to native legal guidelines.

The Singapore funding agency mentioned it might transfer forward to jot down down its full funding in FTX as a result of latter’s monetary place, and whatever the end result of the alternate’s chapter safety submitting.

Temasek confused it nonetheless believed within the potential of blockchain applications and decentralised technologies to remodel sectors, however famous that the “nascency” of the blockchain and crypto trade carried important dangers alongside alternatives.

“There are inherent dangers at any time when we make investments, divest, or maintain our property, and wherever we function,” it mentioned. “Whereas this write-down of our funding in FTX is not going to have important affect on our total efficiency, we deal with any funding losses significantly and there might be learnings for us from this.”

Temasek mentioned its early-state investments accounted for about 6% of its whole portfolio, with its blockchain investments “not a big” a part of such investments. It added that its investments right here had been centered on programmable money, digital property tokenisation, and decentralised id and information, and included blockchain expertise infrastructure akin to protocols, wallets, and metaverse.

Singapore’s central financial institution earlier this week mentioned FTX was not licensed and didn’t function within the city-state. Neither was the alternate exempted from licensing, in accordance with the Financial Authority of Singapore (MAS), which famous that it was not potential to stop Singapore customers from immediately accessing abroad service suppliers, akin to FTX.

Responding to queries that its ban on Binance, putting on its investor alert record, had led native customers to speculate by way of FTX, MAS mentioned Binance was not prohibited from working in Singapore, however didn’t have the mandatory licence to solicit prospects. This meant it needed to cease doing so, the trade regulator mentioned.

Binance shuttered its digital cost token companies right here in February 2022 and withdrew its efforts to safe an area licence for its cryto alternate. Reviews advised the transfer was on account of MAs’ regulatory necessities, although, Binance had mentioned it might focus its operations in Singapore on blockchain improvement.

In its assertion this week, MAS mentioned digital cost token service suppliers had been licensed underneath the nation’s Cost Companies Act for cash laundering in addition to terrorism financing dangers. Additionally they had been regulated for expertise dangers, however weren’t topic to guidelines that protected buyer monies or digital tokens from insolvency dangers, it mentioned, including that it had repeatedly reminded the general public concerning the risks of cryptocurrency trading.