Nov 17, 2022
Ontario Teachers writes off FTX stake, citing potential fraud
OTPP’s allocation to public markets ‘quite low’ relative to peers: CEO
Ontario Teachers’ Pension Plan said it will write down its stake in FTX to zero, taking a US$95 million loss barely a year after making its first investment in Sam Bankman-Fried’s now-bankrupt cryptocurrency exchange.
Teachers said the writedown will have only a “limited impact” because it’s less than 0.05 per cent of the $242.5 billion (US$182 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,” the fund said in a statement Thursday.
The Toronto-based pension manager put US$75 million into FTX’s international and U.S. divisions in October 2021 through its venture capital arm, and invested US$20 million more in FTX.US in January.
Ontario Teachers said it worked closely with advisers and FTX to understand commercial, regulatory, tax, financial and technical aspects of the business. The fund had a 0.4 per cent stake in FTX International and 0.5 per cent of FTX.US when Bankman-Fried’s empire collapsed last week and filed for Chapter 11.
“Recent reports suggest potential fraud conducted at FTX which is deeply concerning for all parties,” Teachers said. “We fully support the efforts of regulators and others to review the risks and causes of failure for this business.”
It’s the second time in three months that a major Canadian pension manager has been forced to write off a crypto investment it only recently made. In August, the Caisse de Depot et Placement du Quebec marked its $150 million stake in Celsius Network LLC to zero after the cryptocurrency lender failed.