Singapore’s Temasek has cut compensation for staff who were responsible for the investment in now bankrupt crypto exchange FTX – even as the company ruled out any “misconduct.”
The state fund had launched an internal investigation into the investment six months back and eventually wrote down the $275 million investment.
In a note published on the company website, Temasek chairman Lim Boon Heng said the independent team submitted the internal review of the investment to the company’s board.
He added, “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.”
Notably, startup investments are inherently riskier than listed companies – even as the upside potential is also higher.
Amid the slump in unlisted startups, most venture capital funds have booked massive losses with SoftBank’s Vision Funds booking a loss of $32 billion in the fiscal year that ended in March.
Temasek meanwhile defended its startup investments and said, “While there are inherent risks whenever we invest, we believe that we have to invest in new sectors and emerging technologies to understand how these areas may impact the business and financial models of our existing portfolio, and whether they would be drivers of future value in an ever-changing world.”
Temasek Cuts Pay of Employees Responsible for FTX Investment
While Temasek did not specify the amount of employee compensation it has cut, the company’s investment in FTX was $275 million – making it the largest investor.
Temasek’s investment in FTX was however less than 0.1% of the fund’s total portfolio which was valued at $304 billion at the end of March.
Last year, Temasek said that its due diligence of FTX “showed it to be profitable.”
In his note now, Heng said, “With FTX, as alleged by prosecutors and as admitted by key executives at FTX and its affiliates, there was fraudulent conduct intentionally hidden from investors, including Temasek.”
He however admitted, “Nevertheless, we are disappointed with the outcome of our investment and the negative impact on our reputation.”
While Temasek’s internal review found no misconduct, staff involved in the FTX #investment will see a reduction in their pay package.
— Whale Coin Talk (@WhaleCoinTalk) May 29, 2023
The FTX fiasco was among the factors that spooked crypto investors last year. The market has meanwhile rebounded this year with bitcoin now trading at around $28,000.
FTX Fiasco: The IRS is Claiming $44 Billion
Incidentally, FTX helped bail out several small crypto firms before it itself went bankrupt. The fiasco sent shock waves across markets. Regulators have also since tightened the regulations.
Notably, the United States Department of Treasury and Internal Revenue Service (IRS) filed claims amounting to a whopping $44 billion against FTX and its subsidiaries.
FTX’s founder Sam Bankman-Fried who’s popularly known by the initials “SBF” has filed to dismiss 10 of the 13 charges against him.
“The United States Internal Revenue Service (IRS) has filed claims worth nearly $44 billion against the estate of bankrupt crypto exchange FTX.”
Of course it did. That particular evil institution of the more generally evil US State will make FTX’s fraud and theft hold its beer.
— Richard Nikoley (@rnikoley) May 27, 2023
Earlier this month, the Economic and Financial Affairs Council of the European Union approved the world’s first set of comprehensive crypto rules which makes exchanges liable if they lose customer funds.
In the US, the Department of Justice is cracking down on crypto exchanges which either indulge or abet in criminal activity.
Most market participants meanwhile agree that action against bad actors would eventually lead to healthier crypto markets.
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