Ho Ching, Temasek’s former CEO, concedes that the Singapore state investment company is feeling the pain after it was forced to write off its entire investment of US$275 million in crypto exchange FTX.
"A loss is a loss, and always painful. A loss in what may turn out to be a badly managed company without adult supervision is egg on our face," writes Ho in a Facebook post on Nov 26.
"It does not mitigate the loss or reduce the pain by saying BlackRock or Softbank or Sequoia also invested in FTX," adds Ho, referring to the list of other renowned co-investors in the Bahamas-based entity.
Samuel Bankman-Fried, FTX’s 30-year-old founder and former CEO is famous for showing up in shorts and T-shirts even at formal conferences. He has spent the past couple of years charming investors and regulators alike, as he preaches his underlying philosophy of effective altruism while donating generously to US politicians.
FTX, which was the second largest crypto exchange valued at US$32 billion at one point, went under recently. Bankman-Fried, based on reports so far, has not put in place proper controls.
Temasek, in its Nov 17 statement, notes that exchanges form a key part of global financial systems.
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“The thesis for our investment in FTX was to invest in a leading digital asset exchange providing us with protocol agnostic and market neutral exposure to crypto markets with a fee income model and no trading or balance sheet risk,” says Temasek.
Temasek had invested a total of US$275 million in FTX between October 2021 and March 2022. The amount is equal to 0.09% of Temasek’s net portfolio value of $403 billion as at March 31.
Ho served as Temasek’s CEO between 2004 and October 2021.
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Her comments came ahead of what is likely to be a busy Parliament session on Monday, Nov 28, with dozens of questions filed by MPs related to Temasek’s FTX investment and also Singapore’s stance towards crypto investments.
For example, Zhulkarnain Abdul Rahim, representing Chua Chu Kang, wants to find out what are the due diligence or measures undertaken prior to investments in cryptocurrency trading platforms such as FTX.
Leong Mun Wai is asking if the Ministry of Finance will consider introducing additional investment guidelines to the investment mandate of Singapore’s sovereign funds in view of the recent investments made on cryptocurrency exchanges.
He Ting Ru wants to know if the Monetary Authority of Singapore, the central bank which regulates the financial services industry, will consider further regulatory measures to prevent any contagion into the wider cryptocurrency, fintech and financial markets.
Yip Hon Weng wants to know if MAS plans to further tighten cryptocurrency trading by retail investors; and whether Singapore retail users should only be allowed to park their assets under a local entity of any cryptocurrency exchange.
Nonetheless, Ho, in the same Facebook posting, points out that some of Temasek’s best investments were made by being contrarian. “And Temasek can afford to be contrarian because it has its own balance sheet and can think long term,” writes Ho, who did not provide any examples.
“With a long term stance, and all the pros and cons that come with that stance, Temasek is not fazed by the twiddles and sentiments of the market. Let’s keep calm, as we continue to tend to the fields and fry other fishes,” adds Ho.
