Ontario Teachers to write off FTX stake, taking $95 million loss

For the second time in three months, a major Canadian pension manager has been forced to write off a cryptocurrency investment

Content of the article

The Ontario Teachers’ Pension Plan said it will reduce its stake in FTX to zero after losing $95 million in just one year after Sam Bankman-Fried made his first investment in the now-defunct cryptocurrency exchange.

Advertising 2

Content of the article

Teachers said the write-off would have only a “limited impact” because it was less than 0.05 percent of the $242.5 billion pension fund. “However, we are disappointed with the outcome of this investment, take all losses seriously and will use this experience to further strengthen our approach,” he said.

Content of the article

The Toronto-based pension manager invested $75 million in FTX’s international and U.S. divisions in October 2021 through its venture capital arm, known as Teacher Enterprise Growth, and another $20 million in FTX.US in January.

Ontario Teachers said it works closely with consultants and FTX to understand the commercial, regulatory, tax, financial and technical aspects of the business. When Bankman-Fried’s empire collapsed last week and filed for Chapter 11, the fund owned 0.4 percent of FTX International and 0.5 percent of FTX.US.

Advertising 3

Content of the article

FTX’s new CEO, John J. Ray III, presented a list of shocking allegations in the bankruptcy filing, including misappropriation of client funds and “non-existent oversight by a management team comprised of a small, inexperienced, underdeveloped group. and potentially compromised individuals.”

It was a “total failure of corporate control” accompanied by a “total lack of reliable financial information,” Ray said.

“Recent reports indicate potential fraud at the FTC, which is deeply troubling to all parties,” said Teachers. “We fully support the efforts of regulators and others to review the risks to this business and the reasons for its failure.”

  1. Coinbase says the full fallout from the FTX crash is yet to come

  2. How regulation slowed the growth of FTX, limited the number of spills in Canada

Advertising 4

Content of the article

This is the second time in three months that a major Canadian pension manager has been forced to completely delist cryptocurrency, which it recently did. In August, Caisse de Depot et Placement du Quebec reduced its $150 million stake in Celsius Network LLC to zero after the cryptocurrency lender failed.

Ontario Teachers launched an enterprise division in 2019 under the leadership of Olivia Steedman, a foundation veteran who previously worked in its infrastructure and natural resources division. Last year, the venture group reported a 39 percent return on its portfolio, which includes some big companies like Elon Musk’s Space Export Technologies Corp., better known as SpaceX.

“As a global, technology-driven innovator in the financial sector, FTX fits well with our mandate,” Steedman said in a news release announcing a $420.69 million investment round last October that included Sequoia Capital, Lightspeed Venture Partners and Tiger Global Management. Sequoia wrote last week that it invested $214 million in FTX.

Bloomberg.com

Listen to Down to Business for in-depth discussions and insights on the latest in Canadian business, available wherever you get your podcasts. Watch the latest episode below:

Advertising

Comments

Postmedia is committed to maintaining a forum for lively but civil discussion and encouraging all readers to share their thoughts on our articles. Comments may take up to an hour for moderation before appearing on the site. Please keep your comments relevant and respectful. We’ve enabled email notifications – you’ll now receive an email if you get a reply to your comment, if there’s an update on a comment thread you’re following, or a user whose comments you’re following. For more information and details on how to adjust your email settings, visit our Community Guidelines.