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

Temasek Holdings has introduced plans to write 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 12 months. Collectively, its investments within the cryptocurrency alternate accounted for 0,09% of its web portfolio worth of SG$403 billion ($293.52 billion), Temasek stated in a press release Thursday.

Pointing to its perception that exchanges had been a key part of worldwide monetary techniques, it stated: “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 price earnings mannequin and no buying and selling or stability sheet threat.”

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

Temasek stated it ran an “in depth” due diligence course of on FTX that spanned some eight months via 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 stories that alleged FTX mishandled buyer property, Temasek stated it held firms through which it invested accountable for his or her actions and obligation to adjust to native legal guidelines.

The Singapore funding agency stated it could transfer forward to write down down its full funding in FTX because of the latter’s monetary place, and whatever the final 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 business 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 stated. “Whereas this write-down of our funding in FTX is not going to have important influence on our total efficiency, we deal with any funding losses severely and there might be learnings for us from this.”

Temasek stated 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 targeted on programmable money, digital property tokenisation, and decentralised id and information, and included blockchain know-how infrastructure reminiscent of protocols, wallets, and metaverse.

Singapore’s central financial institution earlier this week stated FTX was not licensed and didn’t function within the city-state. Neither was the alternate exempted from licensing, based on the Financial Authority of Singapore (MAS), which famous that it was not attainable to forestall Singapore customers from instantly accessing abroad service suppliers, reminiscent of FTX.

Responding to queries that its ban on Binance, inserting on its investor alert listing, had led native customers to speculate via FTX, MAS stated Binance was not prohibited from working in Singapore, however didn’t have the required licence to solicit clients. This meant it needed to cease doing so, the business regulator stated.

Binance shuttered its digital cost token companies right here in February 2022 and withdrew its efforts to safe a neighborhood licence for its cryto alternate. Studies recommended the transfer was as a result of MAs’ regulatory necessities, although, Binance had stated it could focus its operations in Singapore on blockchain improvement.

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