The failed cryptocurrency exchange reveals significant debts to its top creditors as bankruptcy proceedings begin.
The collapsed cryptocurrency exchange FTX has disclosed that it owes its 50 largest creditors nearly US$3.1 billion (approximately S$4.2 billion), with about US$1.45 billion (around S$2 billion) owed to its top ten creditors. This information was shared in a court filing on November 19, shortly after FTX filed for bankruptcy in the United States on November 11. However, the company did not disclose the identities of its leading creditors.
With FTX’s downfall, an estimated one million customers and investors, including Singapore’s government-owned Temasek Holdings, face the prospect of losing their investments entirely. FTX’s failure marks one of the most significant collapses in the cryptocurrency sector to date.
A hearing is set to take place before a U.S. bankruptcy judge on November 22, during which FTX is expected to outline its strategy for selling or reorganizing its global assets. It remains uncertain how much investors and creditors will ultimately recover following the bankruptcy proceedings, but initial estimates suggest they will likely see only a fraction of their original investments returned.
John Ray, the newly appointed CEO who succeeded FTX founder Sam Bankman-Fried, noted that he had never encountered such a “complete failure of corporate controls.” He remarked on the “complete absence of trustworthy financial information” within the company. Bankman-Fried’s personal wealth has reportedly fallen from US$26.5 billion (S$36.4 billion) to under US$1 billion. He announced FTX’s bankruptcy via Twitter, expressing remorse and hope for eventual recovery.
Regarding Temasek Holdings, the firm issued a statement on November 17 indicating that it would write down its investment in FTX, valued at US$275 million (S$377 million), irrespective of the bankruptcy outcome. A write-down reduces the asset’s value for tax and accounting purposes while still retaining some worth. This is distinct from a write-off, which eliminates both present and future value.
Temasek clarified that it currently has “no direct exposure in cryptocurrencies.” In its statement, the company detailed that it invested US$210 million for a roughly 1% stake in FTX International and US$65 million for about a 1.5% stake in FTX US, made across two funding rounds between October 2021 and January 2022. This investment represented only 0.09% of its net portfolio value, which stood at S$403 billion as of March 31, 2022.
Temasek emphasized that there have been misconceptions regarding its investment in FTX, reiterating its lack of direct exposure to cryptocurrencies.
