Singaporean state investor Temasek cut the pay of staff responsible for its failed $275mn investment in FTX, Sam Bankman-Fried’s cryptocurrency exchange that collapsed last year.
Temasek, one of the world’s largest investors, said it was “disappointed” with the investment and the “negative impact on our reputation”, after it was criticised for backing the start-up. The investment constituted 0.09 per cent of its S$403bn (US$298bn) portfolio.
“Although there was no misconduct by the investment team in reaching their investment recommendation, the investment team and senior management, who are ultimately responsible for investment decisions made, took collective accountability and had their compensation reduced,” Temasek said on Monday.
The statement concluded Temasek’s review of the deal, which was launched in November 2022, the same month FTX filed for bankruptcy. The Singaporean investor was hit by a rare public backlash after details behind its failed bet became public.
Temasek defended its “eight-month due diligence” process but critics questioned whether even basic checks were done into the start-up, which at one point was valued at $40bn when Bankman-Fried was in effect serving as the face of the crypto industry. Temasek described its trust in former chief executive Bankman-Fried as “misplaced”.
Lawrence Wong, Singapore’s deputy prime minister, told parliament last year that Temasek’s losses were “disappointing” and had caused reputational damage for the city-state. Ho Ching, the former Temasek chief who is the wife of Singapore’s leader, Lee Hsien Loong, called the fund’s loss “egg on our face”.
Temasek’s failed bet further compromised confidence in Singapore’s ability to regulate the digital assets industry. Singapore had encouraged crypto companies to set up operations locally and allowed both retail and institutional investors to trade in the risky asset class.
But a series of crypto failures connected to the city-state in 2022, including the collapse of hedge fund Three Arrows Capital and crypto platform Hodlnaut, put the city-state under scrutiny.
Experts warned that the report may fuel more criticism because it did not offer many details about the FTX investment and the due diligence process.
“It remains to be seen but there is a risk that such a cursory report may — rightly or wrongly — fuel public dissatisfaction rather than assuage them,” said Kelvin Low, a law professor at the National University of Singapore.
Temasek, whose funds are largely sourced from the return on its own investments, has doubled the value of its portfolio to S$403bn over the past decade according to the latest public information, largely thanks to its big bets on China and tech. It has made a number of investments into crypto and blockchain companies globally but maintains that its overall exposure to the sector is minimal.