Singapore’s Temasek punishes staff for FTX investment

Temasek announced the review last November while offering some insights into the decision-making process. It noted that FTX offered “market neutral exposure to crypto markets with a fee income model and no trading or balance sheet risk.” The due diligence process lasted eight months and included input from external legal and cybersecurity specialists and extensive background interviews.

Revealing the review’s findings, Temasek emphasized its belief that investing in new sectors and emerging technologies is essential to understanding whether and to what extent existing operations and financial models might be impacted. This is also the rationale for early-stage investments specifically.

“Although there was no misconduct by the investment team in reaching their investment recommendation, the investment team and senior management, who are ultimately responsible for investment decisions made, took collective accountability and had their compensation reduced,” it added in a statement. No details were given as to the size and nature of these compensation reductions.

FTX received some USD 2bn in private funding and its valuation surpassed USD 32bn at one point. After clues of insolvency were detected in leaked balance sheet data, the company was effectively reduced to ashes in less than 48 hours in November 2022. The subsequent bankruptcy protection filing was damning in its assessment of FTX’s approach to corporate controls and financial record keeping.

Across two funding rounds in October 2021 and January 2022, Temasek invested USD 210m for approximately 1% of FTX International and USD 65m for about 1.5% of FTX US. It has written down the entire investment, irrespective of FTX’s application for bankruptcy protection.

In addition to Temasek, FTX received funding from BlackRock, SoftBank Vision Fund 2, and Sequoia Capital, Bond, Institutional Venture Partners, Iconiq Capital, Insight Partners, Lightspeed Venture Partners, Thoma Bravo, Ribbit Capital, Tiger Global Management, New Enterprise Associates, Steadview Capital, and Ontario Teachers’ Pension Plan (OTPP).

Several spoke out regarding write-downs, stressing their limited exposure to FTX as part of more extensive portfolios and their adherence to due diligence protocols. Sequoia, for example, noted that the USD 150m loss on FTX incurred by its third global growth fund is offset by USD 7.5bn in realised and unrealised gains. It also reminded investors that it is in the business of taking risk.

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• Topics
• Southeast Asia
• Expansion
• Write-off
• Technology
• Singapore
• Temasek Holdings
• Cryptocurrency