International organizations like Temasek continue to keep their distance from the insolvent crypto exchange company FTX. The Sequoia Capital team revealed exactly one week ago that they were fully devaluing their FTX assets. Sequoia cited FTX’s “liquidity crunch” and “solvency risk” as justifications for its decision in a letter to investors.
The newest development is that Temasek, the national investment fund of Singapore, is getting ready to write off the entire $275 million it invested in the cryptocurrency exchange.
Notably, throughout two funding rounds from October 2021 to January 2022, the Singapore firm contributed $210 million for a minority stake of 1% in FTX International and invested $65 million for a minority stake of 1.5% in FTX US. The publicly issued official statement stated,
“In view of FTX’s financial position, we have decided to write down our full investment in FTX, irrespective of the outcome of FTX’s bankruptcy protection filing.“
Temasek’s Faith In SBF And FTX Lost?
Temasek performed a rigorous “due diligence procedure” on FTX, much like they did with their prior investments. A similar period, from February to October of last year, lasted for about eight months. The statement stated that during that period they evaluated the exchange’s audited financial statement, which revealed it to be “profitable,” and they also allegedly conducted interviews with individuals connected with the company to obtain input on the management team and the company.
The statement issued further read,
“We recognise that while our due diligence processes may mitigate certain risks, it is not practicable to eliminate all risks.“
Several regulatory bodies from around the world are actively investigating the exchange for misusing and mishandling customer assets. If the accusations were accurate, according to Temasek, it would constitute “serious misconduct or fraud.” The statement went on to say,
“It is apparent from this investment that perhaps our belief in the actions, judgment and leadership of Sam Bankman-Fried, formed from our interactions with him and views expressed in our discussions with others, would appear to have been misplaced.“