- tech360.tv
Temasek Holdings Reduces Compensation after FTX Investment Review
Updated: Jan 4
[Edited] Temasek Holdings, a sovereign wealth fund based in Singapore, has announced a reduction in compensation for the team responsible for recommending the investment in the now-bankrupt FTX cryptocurrency exchange.
The cuts also extend to senior management, as they take "collective accountability" for the failed investment. This move comes after an internal review conducted by Temasek, which resulted in a writedown of $275 million.
While there was no misconduct found by the investment team in their recommendation, Temasek Chairman Lim Boon Heng stated that they have taken collective accountability and had their compensation reduced. However, the exact amount of the compensation cut was not disclosed by Temasek.
The loss suffered by Temasek due to the failed investment has impacted its reputation. Zennon Kapron, director of fintech research and consulting firm Kapronasia, emphasized that Temasek has a responsibility to demonstrate to shareholders and the market that it is taking the matter seriously. Kapron sees the reduction in investment team compensation as a step in the right direction, but questions whether it will be enough to restore confidence.
FTX, founded by Sam Bankman-Fried, was once valued at $32 billion and considered one of the most valuable start-ups in the digital currency sector. However, it filed for bankruptcy protection in the United States in November, leading to a markdown of investments by backers such as SoftBank and Sequoia Capital.
Temasek had previously stated that its cost of investment in FTX was 0.09% of its net portfolio value as of March 31, 2022, and that it currently has no direct exposure to cryptocurrencies. The sovereign wealth fund had conducted extensive due diligence on FTX, with audited financial statements showing profitability at the time.
Chairman Lim expressed disappointment with the outcome of the investment and its negative impact on Temasek's reputation. However, he emphasized that Temasek seeks to deliver sustainable returns over the long term by investing in early-stage companies and understanding emerging technologies.
Temasek Holdings has reduced compensation for the team responsible for recommending the investment in FTX.
Senior management also faces compensation cuts as they take collective accountability for the failed investment.
The exact amount of the compensation cut has not been disclosed.
Source: REUTERS