Temasek Holdings has introduced plans to put in writing down its funding in troubled cryptocurrency trade 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 yr. Collectively, its investments within the cryptocurrency trade accounted for 0,09% of its web portfolio worth of SG$403 billion ($293.52 billion), Temasek mentioned in an announcement Thursday.
Pointing to its perception that exchanges have been a key element of worldwide monetary programs, it mentioned: “The thesis for our funding in FTX was to put money into a number one digital asset trade, offering us with protocol agnostic and market impartial publicity to crypto markets with a charge earnings mannequin and no buying and selling or steadiness sheet danger.”
It famous, nonetheless, that it had turn into obvious its perception within the “actions, judgement, and management” of FTX’s now-disgraced founder and CEO Sam Bankman-Fried was “misplaced”.
Temasek mentioned it ran an “intensive” due diligence course of on FTX that spanned some eight months by to its first funding in October 2021. This included a evaluation of the trade’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 mentioned it held firms during which it invested accountable for his or her actions and obligation to adjust to native legal guidelines.
The Singapore funding agency mentioned it could transfer forward to put in writing down its full funding in FTX as a result of latter’s monetary place, and whatever the end result of the trade’s chapter safety submitting.
Temasek pressured it nonetheless believed within the potential of blockchain functions and decentralised applied sciences to remodel sectors, however famous that the “nascency” of the blockchain and crypto business carried vital dangers alongside alternatives.
“There are inherent dangers each time we make investments, divest, or maintain our property, and wherever we function,” it mentioned. “Whereas this write-down of our funding in FTX is not going to have vital affect on our total efficiency, we deal with any funding losses critically and there shall be learnings for us from this.”
Temasek mentioned its early-state investments accounted for about 6% of its complete portfolio, with its blockchain investments “not a big” a part of such investments. It added that its investments right here have been targeted on programmable cash, digital property tokenisation, and decentralised identification and knowledge, and included blockchain know-how infrastructure equivalent to protocols, wallets, and metaverse.
Singapore’s central financial institution earlier this week mentioned FTX was not licensed and didn’t function within the city-state. Neither was the trade exempted from licensing, in keeping with the Financial Authority of Singapore (MAS), which famous that it was not attainable to stop Singapore customers from immediately accessing abroad service suppliers, equivalent to FTX.
Responding to queries that its ban on Binance, inserting on its investor alert checklist, had led native customers to take a position by FTX, MAS mentioned Binance was not prohibited from working in Singapore, however didn’t have the mandatory licence to solicit clients. This meant it needed to cease doing so, the business regulator mentioned.
Binance shuttered its digital cost token providers right here in February 2022 and withdrew its efforts to safe an area licence for its cryto trade. Studies instructed the transfer was on account of MAs’ regulatory necessities, although, Binance had mentioned it could focus its operations in Singapore on blockchain improvement.
In its assertion this week, MAS mentioned digital cost token service suppliers have been licensed underneath the nation’s Cost Providers Act for cash laundering in addition to terrorism financing dangers. Additionally they have been regulated for know-how dangers, however weren’t topic to guidelines that protected buyer monies or digital tokens from insolvency dangers, it mentioned, including that it had repeatedly reminded the general public concerning the dangers of cryptocurrency buying and selling.