Temasek Found No Major Concern with FTX’s Financial Despite Extensive Due Diligence for 8 Months
Temasek Found No Major Concern with FTX’s Financial Despite Extensive Due Diligence for 8 Months.
According to Temasek, the Singapore state-owned investment firm didn’t find any significant red flags in FTX’s financials despite investing $275 million into the now-bankrupt exchange in 2021.
Temasek On Reviewing FTX’s Financial
According to the firm, it conducted “extensive due diligence” from Feb to Oct 2021 before investing $210 million for a minority stake of 1% in FTX International as well as $65 million for a minority stake of 1.5% in its United States-based entity FTX US.
“We recognize that while our due diligence processes may mitigate certain risks, it is not practicable to eliminate all risks,” said the firm.
The company reviewed FTX’s audited financial statements, conducted a regulatory risk analysis with crypto financial market service providers, and consulted with external legal and cybersecurity specialists. Legal and regulatory reviews were conducted for the investments, according to Temasek.
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In addition, a second precaution was conducted by the firm by interviewing employees, industry participants, and other investors familiar with FTX.
“It is apparent from this investment that perhaps our belief in the actions, judgment, and leadership of Sam Bankman-Fried, formed from our interactions with him and views expressed in our discussions with others, would appear to have been misplaced,” the firm said.
The Firm Have No Direct Exposure In Crypto to FTX
Temasek estimates its investment in FTX represents 0.09% of its $293 billion portfolio value, and none of its disclosed investments involve crypto.
“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,” cited the company’s website.
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In addition, the firm clarified that their investment in FTX does not involve direct exposure to cryptocurrencies.
“ To clarify, we currently have no direct exposure in cryptocurrencies,” the firm said.
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