Temasek is engaging with FTX after potential Binance bailout 

SINGAPORE state investor Temasek said it is in talks with crypto exchange FTX, after looming insolvency led to a potential bailout from rival Binance.

“We are aware of the developments between FTX and Binance, and are engaging FTX in our capacity as a shareholder,” said a Temasek spokesperson.

FTX, the world’s third largest crypto exchange, is said to be facing a liquidity crunch. It has frozen user withdrawals and signed a non-binding letter of intent with Binance for a full acquisition on Nov 8. Temasek invested in the Series B and Series C funding rounds of FTX, which raised US$900 million and US$400 million respectively.

FTX has been facing scrutiny after a Coindesk report claimed to have the balance sheet of founder Sam Bankman-Fried’s crypto hedge fund Alameda Research, which the hedge fund confirmed but said it did not reflect all assets. The report pointed to potential solvency issues with Alameda, and the bulk of the hedge fund’s assets under management came from FTX’s own token, FTT.

The token accounted for US$5.8 billion of the US$14.8 billion assets on the balance sheet, and raised questions about the murky relationship between FTX and Alameda. Industry players pointed out the hedge fund’s market maker role while borrowing from FTX using FTT as collateral.

Things came to a head after Binance’s founder Zhao Changpeng on Nov 6 said that he would sell Binance’s stash of FTT worth about US$500 million. With FTT’s price falling, there was an attempt to defend the token price before FTT fell to around US$4.

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Bankman-Fried was originally slated to speak at the Salt iConnections Asia event in Singapore on Nov 14-16, where FTX is a title sponsor. On Wednesday (Nov 9), Bankman-Fried was removed from the agenda.

This is not the first crypto exchange in which Temasek has invested. It previously invested in Binance through Vertex Ventures, with the crypto exchange setting up operations in Singapore. Binance ultimately gave up its ambitions of operating in the island republic and said in December 2021 that it would withdraw its digital payment token licence application.