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Temasek, Singapore’s State Fund, Reduces Compensation Following Unsuccessful Investment by FTX

Temasek Holdings, Singapore’s State-Owned Investment Fund, Reduces Pay of Staff Involved in Failed FTX Investment

Temasek Holdings, a state-owned investment fund in Singapore, has announced a reduction in the compensation of its staff responsible for the unfortunate investment in the cryptocurrency exchange FTX, which collapsed last year.

The fund had written off the entire $275 million (£222.8 million) it had invested in FTX, which allegations of fraudulent activities have now plagued. Prosecutors have accused FTX’s former CEO, Sam Bankman-Fried, of orchestrating a massive fraud scheme that may result in losses amounting to billions of dollars for investors. Mr. Bankman-Fried has pleaded not guilty to these charges.

In a statement issued on Monday, Temasek acknowledged that the investment team and senior management, who bear ultimate responsibility for investment decisions, have taken collective accountability for the failed investment and consequently reduced their compensation. The sovereign wealth fund expressed disappointment over the investment’s outcome and its negative impact on its reputation. However, the exact extent of the salary reductions was not disclosed.

Temasek had initially invested $210 million and subsequently added another $65 million in FTX through two funding rounds between October 2021 and January 2022. Before these investments, the state-owned fund had spent eight months evaluating the cryptocurrency exchange, including a review of audited financial statements that indicated profitability.

As of March 2022, Temasek’s total worth exceeded S$403 billion ($298.1 billion; £241.3 billion), indicating that the funds allocated to the cryptocurrency platform constituted only a small fraction of its overall investments. Nonetheless, the losses incurred in FTX significantly impacted Temasek’s reputation, as stated by Singapore’s Deputy Prime Minister Lawrence Wong in December. He emphasized that the reputational damage persists regardless of the involvement of other leading global institutional investors like BlackRock and Sequoia Capital in FTX.

Sovereign wealth funds serve as a nation’s savings account and typically invest in shares, currencies, real estate, and other assets. FTX, once valued at $32 billion a year ago, filed for bankruptcy protection in November with an estimated $8 billion of customer funds missing.

Sam Bankman-Fried, one of the most prominent figures in the cryptocurrency industry and co-founder of FTX, has accused US federal prosecutors of embezzling billions of dollars from FTX users to settle debts at his other firm, Alameda Research, and making other investments.

In December, Mr. Bankman-Fried faced eight criminal charges, including wire fraud, money laundering, and campaign finance violations. Another five charges were brought against him in March, with financial regulators also pursuing claims. FTX co-founder Gary Wang and Caroline Ellison, former head of Alameda, have also been charged in connection with the company’s collapse.

In December, Mr. Bankman-Fried was arrested in the Bahamas, where he resided, and FTX was headquartered. In an interview with BBC News just days before his arrest, he maintained his innocence, stating that he did not knowingly commit fraud and did not want the unfortunate events to transpire. He humbly admitted to overestimating his competence in the situation.

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