Temasek Holdings issued a statement on Thursday (Nov 17) saying it will be writing down its investment in cryptocurrency exchange company FTX worth US$275 million (S$377 million) regardless of the outcome of the firm’s bankruptcy protection filing.
To write down an asset is to reduce its value for tax and accounting purposes, but the asset still retains some value. It is not the same as writing off an asset, which negates its present and future value.
FTX filed for bankruptcy in the US on Friday (Nov 11), leading to the possibility that all of its investors would lose everything they’ve put into the cryptocurrency exchange giant if the company cannot be saved.
Until a few weeks ago, FTX was the third biggest cryptocurrency exchange around the globe and had been worth nearly S$44 billion just last January.
Temasek, which is owned by the government of Singapore, clarified in its statement that it currently has “no direct exposure in cryptocurrencies”.
The statement said, “We invested US$210 million for a minority stake of ~1% in FTX International, and invested US$65 million for a minority stake of ~1.5% in FTX US, across 2 funding rounds from October 2021 to January 2022.
The cost of our investment in FTX was 0.09% of our net portfolio value of S$403 billion as of 31 March 2022.
There have been misperceptions that our investment in FTX is an investment into cryptocurrencies. To clarify, we currently have no direct exposure in cryptocurrencies.”
Temasek also said that after the due diligence it exercised in its investment in FTX, reports emerged that customer asset had been mishandled and misused in FTX.
“If these statements are true, then this amounts to serious misconduct or fraud at FTX. All of this is currently being investigated by the regulators.”
The company’s belief in FTX’s founder, Sam Bankman-Fried, would appear to have been misplaced, it added.
“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 said, adding that it will “continue to remain prudent and exercise caution even as we explore opportunities that are aligned with our structural trends, to deliver sustainable returns over the long term for our overall portfolio.”
Temasek’s statement can be read in full here. /TISG