Another collateral damage from the collapse of the FTX exchange. The famous Singaporean sovereign fund, Temasek, announced the loss of 275 million dollars following its investment in the FTX group. However, the company would have carried out 8 months of extensive research before investing.
Temasek loses $275 million on FTX
“The youth of the blockchain and digital asset industry presents countless opportunities as well as significant risks”. Thus begins the press release published this Thursday, November 17 by Singapore’s sovereign wealth fund, Temasek.
We learn that Temasek has invested $210 million to acquire 1% of the shares of the FTX group, as well as $65 million additional funds in the FTX.US subsidiary, via two fundraising rounds in October 2021 and January 2022. In total, this represents 0.09% of total portfolio of the Singaporean fund, estimated at 430 billion dollars.
In this press release, Temasek justifies its investment explaining that “exchanges are a key element of the global financial system”. Thus, to invest in the blockchain industry without exposure to the cryptocurrency market, the very serious Singaporean fund chose FTX:
“The thesis of our investment in FTX was to choose a leading digital asset exchange, providing us with market-agnostic and neutral exposure to the cryptocurrency markets. »
Finally, as a result of recent news, Temasek announces permanently cross out the FTX line of its investments. Regardless of the outcome of Sam Bankman-Fried’s exchange filing for bankruptcy, it will now be considered void.
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8 months of research on FTX before investing
Temasek is an investment fund recognized for its seriousness and expertise, as evidenced by the size of its portfolio. It has a strict investment methodwhich imposes long periods of research and advanced analyzes to estimate the risk-return ratio.
According to the press release, FTX was no exception. The due diligence process took approximately 8 monthsfrom February to October 2021. During this period, Temasek explains that he notably examined the financial health of the exchange, revealing that it was profitable.
Furthermore, the fund explains having devoted the majority of its efforts on the potential risks associated with regulation of the cryptocurrency industry and more particularly trading platforms. Advice from legal and cybersecurity experts was even sought, with legal and regulatory review by FTX.
Finally, Temasek recognizes that “while due diligence processes can mitigate some risks, it is not possible to eliminate them all”. Importantly, the release acknowledges that, like the majority of investors, the fund was fooled by Sam Bankman-Fried :
“It is apparent from this investment that our belief in the actions, judgment and leadership of Sam Bankman-Fried, formed from our interactions with him and the opinions expressed in our discussions with others, appears to have been misplaced. . »
Temasek concludes his press release renewing his interest for decentralized technologies and specifying that recent events should remind us that the blockchain industry is full of opportunitiesbut carries a lot of risk.
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Source: Temasek press release
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