The collapse of the now-bankrupt cryptocurrency exchange FTX has put the Prime Minister and the government of Singapore in a bind. Prime Minister Lee Hsien Loong and Deputy Prime Minister Lawrence Wong will face questioning over their failure to protect retail investors.
MPs from the opposition Workers’ Party raised 15 questions about Temasek’s investment and FTX’s bankruptcy. MPs questioned the government’s credibility in monitoring the scope of investments by Temasek and Singapore’s sovereign wealth fund GIC.
Debates surrounding government policies when investing in digital assets will be further examined in a parliamentary debate on November 28, a Singapore daily reported. Opposition lawmakers have recommended that a bipartisan committee question Temasek about his investment strategies and risk management approaches.
Singaporean state-backed investor Temasek was one of 69 investors who invested in cryptocurrency exchange FTX’s $420 million funding round in October 2021. The firm had invested $210 million in the global exchange to a 1% minority stake and another $65 million in its sister company FTX.US. However, the state-backed investor wrote down his entire $275 million investment in the cryptocurrency exchange “regardless of the outcome of FTX’s bankruptcy protection filing.”
Temasek also revealed that despite eight months of due diligence in 2021, he found no significant red flags in FTX’s financials before deciding to invest $275 million in the now-failed cryptocurrency exchange. In addition to Temasek, Sequoia Capital also reduced its $214 million investment in the cryptocurrency exchange.
The impact of the FTX collapse has been far-reaching and hardest hit have been the millions of retail investors whose funds were embezzled and used by the exchange to mitigate its own risk. The collapse has also given rise to a broader regulatory debate and calls for better regulatory oversight of these centralized entities.
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