Singapore Temasek Named in FTX amidst Struggles

TL; DR

Temasek, Sino Global, Sequoia Capital, Softbank and other VC firms are facing a lawsuit in the United States for supporting FTX despite its poor financial management record.

Temasek has said that it misplaced its trust in Sam Bankman-Fried when it invested in FTX crypto exchange.

Most VC firms that invested in FTX incurred huge losses.

Introduction

Almost ten months after the collapse of the FTX crypto exchange there are still several on-going legal battles. The current lawsuits have involved several persons and companies. This article will discuss how Temasek and several crypto investment projects have been implicated in assisting FTX in its illegal dealings.

Lawsuit against Temasek and Several Venture Capitals

Temasek, a Singaporean state firm, and other venture capital (VC) investment firms which include Sino Global of Hong Kong, Sequoia Capital, and Japan’s Softbank are defendants in a class-action lawsuit filed in the US District Court for the Northern District of California for working alongside now-bankrupt crypto exchange FTX in its illegal activities.

The lawsuit claims that Temasek Company and the cited VC firms made different misleading statements that enticed many customers to make crypto investments in FTX. The complainant said that the major aim of these crypto firms was to lure individuals and institutions to invest in FTX for their personal gains.

Read also: FTX’s collapse Affected a Wide Cross section of the Crypto Eco

One of the key bases for the legal action is that: “The Multinational VC Defendants also made numerous deceptive and misleading statements of their own about FTX’s business, finances, operations, and prospects for the purpose of inducing customers to invest, trade, and/or deposit assets with FTX.“
Basically, the complainant is seeking compensation for the financial losses they incurred when the exchange closed down and are calling for punitive action against the defendants.

During its advertisement campaigns, FTX cited “significant financial and public support” from venture capitals and other large business partners like Temasek. Therefore, the plaintiff claims that “without the multinational VC defendants, the largest financial fraud in US history would not have occurred.”

Considering these facts, the defendants actively participated in the “FTX Group’s massive multibillion-dollar global fraud.” Stated differently, “they “perpetrated, conspired to perpetrate, and/or aided and abetted the FTX Group’s multi-billion-dollar frauds for their own financial and professional gain.”

The FTX lawsuit also states that the diligent checks which the defendants carried out enabled them to identify various omissions, misappropriation of investor funds and untruthful conduct but did not publicize them. Therefore, it is highly likely that the accused were aware that Sam Bankman-Fried and his team were misappropriating their deposits.

The main allegation against Temasek and several VC firms is that while FTX exchange was stealing the customers’ funds and violating several securities laws these business organizations supported it by claiming that they carried out due diligence before investing in it.

Read also: FTX Sues Sam Bankman-Fried and Former s for $1 Billion

Temasek

There is a good reason for the complaint to file a lawsuit against Temasek, considering that it claimed to have carried out an eight-month-long financial audit of FTX crypto exchange in 2021. Also, it strongly claimed that it did not find any issue of concern.

Unfortunately, Temasek lost $275 million investment due to the FTX collapse. As a punitive measure it slashed the compensation of its senior utives who were responsible for investing in the crypto exchange. However, the company clearly admitted that it misplaced its trust in Sam Bankman-fried.

Its spokesperson said “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.”

It added “We expect companies that we invest in to comply with their obligations under the laws and regulations of jurisdictions in which they have investments or operations, abide by sound corporate governance, and above all act ethically always.”

Nevertheless, Temasek stood by its word that it carried out a thorough audit and investigation of FTX before investing in it. It claimed that it uated FTX’s legal compliance and Cybersecurity. It also sought advice from various specialists who include Cybersecurity experts and external legal advisors. Additionally, it had interviews with other investors, industry experts and the company’s management team.

In the end, Temasek spokesperson concluded, “We recognise that while our due diligence processes may mitigate certain risks, it is not practicable to eliminate all risks.”

It is important to note that the other VC investment firms lost billions of dollars when FTX collapsed in one of the largest crypto frauds in history. For example, Sino Global filed a claim of $67.3 million against the exchange.

Conclusion

In a lawsuit filed on 7 August, the complainant accuses Temasek and several VC firms for misleading the public on FTX’s financial misdeeds. On the other hand, Temasek and other VC investment firms said that they misplaced their trust in Sam Bankman-Fried which led to their loss of funds. However, Temasek maintains that it exercised due care before investing in the FTX exchange.

Read also: FTX Event and Its Domino Effects

FAQs about Temasek

Is Temasek invested in crypto?

Temasek, a Singaporean state firm, has no investments in cryptocurrencies. Its last crypto investment was in FTX exchange where it lost more than $275 million in investment funds when the exchange collapsed in November 2022.

How much did Temasek lose in cryptocurrency?

Temasek lost $275 million when the FTX exchange collapsed in November 2022. It did not recover any of that amount. Ever since that time Temasek has not invested in cryptocurrency again.

Does Temasek hold bitcoin?

Temasek does not own Bitcoin or any other cryptocurrency. Currently, it does not have any plan to invest in cryptocurrencies due to regulatory uncertainty in the sector.

Why did Temasek invest in FTX?

Temasek invested in FTX because it anticipated to get a high return on its investment. Before investing in the company it audited FTX’s financial performance, its security as well as its legal compliance. In addition, it trusted its founder and CEO Sam Bankman-Fried.