As the contagion following the collapse of FTX continues to spread across the crypto and digital asset ecosystem, Temasek Holdings, another investor in the now-bankrupt FTX has announced its decision to write down all of its investment in the platform.
According to the announcement by the state-owned firm, Temasek will write down its investments worth $275 million irrespective of the outcome of FTX’s bankruptcy proceedings. Interestingly, after investing $210 million in October 2021, Temasek held a 1% stake in FTX International. It also held another 1.5% stake in FTX US after its $65 million investment in January 2022.
Fortunately for the investment firm, the invested sum totaling $275 million represents only a very minute (0.09%) portion of the firm’s portfolio valued at S$403 billion ($293 billion) as of the end of the first quarter of 2022. Therefore this write-down will have no significant impact on the investment firm’s overall performance.
Judging from the size of its investments in FTX, it is evident that, Temasek has no direct exposure to cryptocurrencies. Its investment in FTX was an attempt to back a leading digital asset exchange according to the released statement.
Before its investment in FTX, Temasek had conducted its due diligence process on the platform. The process spanned from February 2021 to October 2021 and the result of the process showed FTX to be profitable. However, the statement from the firm shows that its belief in FTX and former CEO Sam Bankman-Fried appeared to have been misplaced.
Effect of FTX Fallout
Before its sudden collapse, FTX which was once valued at $32 billion had several high-profile backers including SoftBank, Sequoia, Tiger Global, Insight Partners, and Paradigm. The platform filed for bankruptcy protection last week, leaving several investors grappling with the effect of its collapse.
Just recently, Maps.me, a mobile alternative to Google Maps, and Oxygen, a DeFi prime brokerage service provider, announced their level of exposure to the FTX ecosystem. The DeFi projects are already exploring other options to remain afloat as 95% of their overall ecosystem token supply is in FTX.