Singapore’s Temasek Holdings punishes its senior staff for investing millions in now-collapsed FTX

Temasek Holdings, Singapore’s state-owned wealth management fund, has punished its senior staff responsible for investing $275m in the cryptocurrency exchange FTX. The company has decided to cut the pay of the staff involved in the decision-making process. However, it was not revealed how much the salaries were reduced by.

The fund poured in $210 million in FTX in the first investment round in October 2021 and $65 million in the second round in January 2022. The company said it made the investment only after evaluating the performance of the exchange for eight months and finding that it was profitable. 

Watch: Cryptocurrencies tumble over failed FTX deal 

However, the exchange collapsed in October 2022, with FTX filing for bankruptcy the following month. It is speculated that FTX investors lost a whopping $8 billion in the crypto exchange bloodbath. 

Our reputation took a big hit: Temasek

In a statement released on Monday, Temasek said that it was disappointed with the outcome of the investment decision. “The investment team and senior management, who are ultimately responsible for the investment decisions made, took collective accountability and had their compensation reduced,” the company said, adding that it had a negative impact on the reputation of the company.

As of March this year, Temasek’s total holdings were worth more than $298 billion. So, the money invested in FTX amounted to a small percentage of Temasek’s total investments.

However, Singapore’s Deputy Prime Minister Lawrence Wong suggested in December that the investment had caused damage to the fund’s reputation. “The fact that other leading global institutional investors like BlackRock and Sequoia Capital also invested in FTX does not mitigate this,” he said.

How did FTX collapse?

FTX, a cryptocurrency exchange platform, experienced a dramatic rise and fall in a short period of time. Founded by Sam Bankman-Fried in 2019, FTX quickly gained popularity among customers and attracted significant investment from venture capitalists, reaching a valuation of $32 billion by January 2022.

However, in November 2022, it was revealed that FTX had been involved in major fraud. Instead of customers’ funds being held by FTX, they were redirected to accounts controlled by Alameda Research, a cryptocurrency trading firm. This discovery caused FTX to unravel, leading to significant losses for customers and investors.

FTX’s balance sheet leaked to the public, showed a lack of transparency and poorly labeled entries, with liabilities far exceeding assets. FTX had not produced audited balance sheets or followed standard financial reporting procedures.