January 29, 2023

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Singapore Government Faces Intense Scrutiny Over FTX Collapse

Singaporean Prime Minister Lee Hsien Loong and Deputy Prime Minster Lawrence Wong are facing intense scrutiny from the parliament over FTX investor losses and the due diligence undertaken by state-owned investor Temasek Holdings.

The opposition – Workers’ Party – has reportedly filed over a dozen of questions about Temasek’s investment while questioning the Singaporean government’s credibility in monitoring losses incurred by retail investors and also the city-state’s stance towards crypto investments in general. Questions were also raised with respect to due diligence or measures undertaken before investments in platforms such as FTX.

Leong Mun Wai – a member of the opposition Progress Singapore Party – has also sought answers on how the Ministry of Finance plans to consider the introduction of additional guidelines to the investment mandate of Singapore’s sovereign funds.

High Profile Investments in FTX

The latest development comes more than a week after Temasek said it wrote down its full investment in the fallen crypto exchange, “irrespective of the outcome” of its bankruptcy protection filing.

Temasek, owned by Singapore’s government, reportedly invested $210 million in FTX International, giving it a minority stake of about 1%.

Another $65 million was poured in for a minority stake of approximately 1.5% in the US affiliate of the crypto exchange in two funding rounds from a period of October 2021 to January 2022. The total cost of its investment was reportedly 0.09% of its net portfolio value of $293 billion.

The firm also previously clarified that its due diligence process for FTX took about eight months, from February to October 2021, and entailed a comprehensive review of the exchange’s audited financial statement, which showed it to be profitable.

“Due Diligence”

Temasek reportedly analyzed the relationship, preferential treatment, and separation between controversial trading firm Alameda and FTX and was given “appropriate confirmations that were contractually binding.”

Following the collapse, however, Temasek stated,

“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.”

Defending Temasek’s investment strategy, its former chief executive – Ho Ching – said in a weekend Facebook post that some of the firm’s notable investments were made “by being a contrarian.”

However, she conceded that the Singapore state investment company “is feeling the pain” after it was forced to write off its entire investment. She further went on to add that “a loss in what may turn out to be a badly managed company without adult supervision is egg on our face.”

Source: CryptoPotato