Key Takeaways




After FTX’s collapse, Temasek wrote off its entire investment, which amounted to $210 million for FTX International and $65 million for FTX.US.



Temasek claims it conducted an extensive due diligence process into FTX before making its investment.




Temasek Holdings, the Singaporean investment firm, has taken decisive action in response to its investment in the collapsed cryptocurrency exchange FTX. The company has reduced compensation for the executives responsible for the ill-fated investment, signaling its commitment to accountability. Temasek, once the second-largest external investor in FTX, faced scrutiny following the collapse of the exchange.



In a statement released on May 29, Temasek revealed that it had completed an internal review of the $275 million investment loss incurred from FTX, which occurred in November 2022. The investment firm, known as one of Singapore’s sovereign wealth funds, has taken “collective accountability” for the investment’s failure.



Temasek Chairman, Lim Boon Heng, stated that although the investment team had not engaged in misconduct while making the recommendation, they and senior management were ultimately responsible for the investment decisions and would have their compensation reduced.



“We are disappointed with the outcome of our investment and the negative impact on our reputation,” he said



Shortly after FTX’s collapse, Temasek wrote off its entire investment, which amounted to $210 million for FTX International and $65 million for FTX.US. The losses represented a minute portion—0.09%—of Temasek’s net portfolio value of $293.5 billion (SGD 403 billion) from the previous year.



Temasek clarified that it had conducted an extensive due diligence process before investing in FTX . The firm thoroughly reviewed FTX’s audited financial statements, evaluated regulatory risks, and assessed cybersecurity threats. Following the collapse, Temasek pledged to refine its investment appraisal procedures, especially for rapidly growing companies.



Despite the setback, Temasek affirmed its commitment to investing in new sectors and emerging technologies, emphasizing the need to understand their potential impact on existing portfolios and future value creation in an ever-changing world.



The firm acknowledged that while investments inherently carry risks, it will exercise caution when considering new investments in the blockchain space, reiterating its stance of not investing in cryptocurrencies.



The collapse of FTX not only resulted in financial losses but also impacted Temasek’s reputation. Chairman Lim Boon Heng expressed disappointment with the outcome and the negative consequences for the firm. The Deputy Prime Minister of Singapore, Lawrence Wong, echoed these sentiments, acknowledging the financial loss and reputational damage caused by the FTX collapse.



During its due diligence, Temasek claims that it thoroughly examined FTX’s financial statements, assessed regulatory risks associated with crypto market financial service providers, and sought legal advice over a nine-month period from February to October 2021. The firm also claims that it engaged with individuals possessing firsthand knowledge of FTX, including employees, other investors, and industry participants.