Temasek Admits $275 Million Loss From FTX Bankruptcy

Singapore's state-owned entity says it conducted an 8-month due diligence on FTX before investing without detecting the risk of collapse.

Sam Bankman-Fried
Temasek admits $275 million loss from FTX bankruptcy

UBS warns that there are $52 billion from funds in the cryptocurrency world. Large funds participating in FTX funding rounds continue to acknowledge losses suffered from the collapse of the cryptocurrency exchange platform founded in 2019 by Sam Bankman-Fried.


After SoftBank, Ontario Teachers, and Sequoia Capital, today comes the turn of Temasek. The Singapore sovereign wealth fund has provisioned at zero the value of its total investment in FTX, which amounted to $275 million, given the low chances of recovering some money in this firm's receivership process.


Temasek explains that it dedicated $210 million to buy around 1% of FTX International and another $65 million for 1.5% of FTX US in two rounds of financing carried out between October 2021 and January 2022. The market valued the group at $32 billion in the latter increase.


The firm explains that "the thesis of the transaction was to invest in a leading digital asset exchange platform with neutral exposure to crypto markets and a fee-based revenue model with no trading or balance sheet risk." They have to meet this premise, as FTX racked up a $9 billion liability with hundreds of thousands of customers depositing their assets on that exchange.

"As with other investments, we did extensive due diligence on FTX, which took approximately eight months from February to October 2021. During this time, we reviewed the audited financial statements, which showed that it was profitable. In addition, we focused on regulatory risks and accumulated information on the quality of the management team based on interviews with employees, industry participants, and other investors." Temasek

Nonetheless, the fund acknowledges that "while due diligence can mitigate certain risks, it cannot eliminate them. There are reports of misuse of client assets by FTX. If true, this amounts to possible fraud at FTX, which regulators are investigating."


Despite the blow, Temasek points out that the investment in FTX accounts for just 0.09% of the value of its portfolio, placed at $403 billion in March 2022. "As investors seeking long-term returns, we must invest in new and emerging sectors and developing business models. To understand the applications and impact they can have on our portfolio or to see if they are future value drivers in a changing world," the Asian fund concludes.


FTX raised $1.8 billion between 2020 and 2021 through different funding rounds. UBS analysts point to the impact that losses by large investors may have on the startup funding market. It estimates that $52 billion of seed fund capital has gone into the crypto world.



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