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Temasek cuts pay for staff behind FTX punt
Singapore sovereign lost 0.09% of net portfolio value with crypto exchange collapse
Tom King 30 May 2023

Following an internal review into the now-bankrupt crypto exchange FTX, previously headed by Sam Bankman-Fried, Singaporean sovereign wealth fund Temasek Holdings will cut the compensation of certain staff over the US$275 million loss it incurred by investing in the exchange.

“An independent team has conducted an internal review of the investment and the findings were directly presented to our board and its risk and sustainability committee,” says Lim Boon Heng, the fund’s chair. “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 invested US$210 million for a less than 1% stake in FTX International and US$65 million for a less than 1.5% stake in FTX US across two funding rounds from October 2021 to January 2022. The cost of its investment in FTX was 0.09% of Temasek’s net portfolio value of S$403 billion (US$298 billion) as of March 31 2022, which the sovereign has written off.

In reference to how the investment company makes its investment decisions, Temasek says on its website that it invests in companies with “strong corporate governance” and that: “For each investment we make, we conduct bottom-up intrinsic value analysis, with expected returns evaluated against a risk-adjusted cost of capital that is derived using the capital asset pricing model.”

Prior to investing, Temasek said it conducted extensive due diligence into the exchange between February and October of 2021.

FTX collapse

Following a flood of customer withdrawals from FTX in early November 2022, its then-CEO Sam Bankman-Fried admitted that the company did not have sufficient assets to meet customer demand, and it filed for bankruptcy on November 11 2022.

As the business unravelled, an extensive amount of fraudulent activity was uncovered at FTX. Bankman-Fried has since pleaded not guilty to 13 counts of fraud, conspiracy, making illegal campaign contributions and foreign bribery, and he is currently confined to his parents’ California home on a US$250 million bond ahead of his trial scheduled for October 2 this year. Among the numerous charges laid against Bankman-Fried is an accusation of conspiring to bribe Chinese officials with US$40 million worth of payments. 

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