Examining the collapse: Temasek Chairman’s review of the FTX Cryptocurrency exchange collapse

After the collapse of one of the largest cryptocurrency exchanges, FTX, last year authorities and other exchanges started reviewing their risk assessment process. Singapore’s renowned sovereign wealth fund, Temasek Holdings, recently reviewed the exchange and shared findings and conclusions in its report. 

On May 29, Temasek’s Chairman revealed a statement on FTX as an investor-owner decided to deliver sustainable returns over the long term. Additionally, it has pledged to take “collective accountability” for its ill-fated $275 million investment in collapsed crypto exchange FTX. It acknowledged that there are inherent risks associated with investments. Also, the Chairman of Temasek said that they need to invest in new sectors and emerging technologies to understand how these new technologies impact the new businesses and financial models of the existing frameworks. 

In the statement, the Chairman clarified some questions related to the FTX issue and its contagion effects on investors including Temasek. According to reports, FTX willfully hid the fraudulent conduct from its investors which caused widespread outage in the industry. Additionally, Temasek’s Chairman said that it impacted the reputation of its company negatively.

For those who are not aware, after the collapse of the FTX cryptocurrency exchange in November last year, Temasek clarified that it has no significant stake in FTX. According to Temasek, the $210 million investment, which represented 1% of FTX International, and the $65 million investment, which represented 1.5% of FTX.US, account for 0.09% of the company’s $293.5 billion (SGD 403 billion) net portfolio value.

An independent probe has been conducted into the internal review of the investment and the findings were directly transferred to the Board Risk & Sustainability Committee and our Board. The collapse of FTX caused severe problems worldwide because every country was forced to review its existing regulatory frameworks. Lawmakers like Elizabeth Warren have taken an utterly pessimistic stand against cryptocurrencies and raised their voices very strongly to ban crypto in the United States. Frequent raids on Bitcoin ATMs by authorities in the United Kingdom are also the counter effects of the exchange collapse. 

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