Temasek is hit as Novogratz warns that the worst is coming

(Bloomberg) — Singapore’s state investor, Temasek International, invested $200 million to $300 million in cryptocurrency giant FTX before the implosion and is preparing to write down the full bet, people familiar with the matter said.

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Michael Novogratz, the billionaire founder of Galaxy Digital Holdings, said the crypto crisis could get worse as the industry braced for more contagion from the fall of Sam Bankman-Fried’s FTX empire.

Bankman-Fried took to Twitter on Wednesday and told his followers that “there was too much clout — more than I realized” in his company. That came a few hours after he posted that FTX US had enough money to refund customers.

The fallout from the crisis threatens the future of cryptocurrency lenders like BlockFi Inc. and Voyager Digital Ltd. Digital asset markets were stable in a lull from the recent turmoil, with Bitcoin hovering around $16,700.

Key stories and developments:

  • Singapore’s Temasek writes off more than $200 million in FTX

  • FTX leaves an empty black box where due diligence used to be

  • Matter Labs raised $200 million just before the chaos in the crypto market

  • FTX’s Crypto Kids came dangerously close to emerging futures

(Time references are New York unless otherwise noted.)

Temasek takes a hit (06:45)

Temasek invested between $200 million and $300 million in FTX before the implosion, according to people familiar with the matter.

Temasek is now preparing to write off the full amount, one of the people said, asking not to be identified because the matter is private. Another lender, Sequoia Capital, wrote down the full value of its $214 million bet on the stock, while a person with knowledge of the matter said SoftBank Group Corp. expects a loss of about $100 million on its investment.

FTX Hacker’s Haul (6:05 PM HK)

The hacker who raided Sam Bankman-Fried’s collapsed crypto exchange FTX is now one of the world’s largest holders of the token Ether.

A wallet linked to the exploit traded about $49 million in stablecoins — primarily Dai — for Ether on Tuesday, according to security specialists PeckShield.

Wallets on FTX were drained of more than $663 million in tokens, of which $477 million was believed stolen and the rest moved to secure storage by FTX, according to blockchain specialist Elliptic.

Novogratz warns the worst may be ahead (6pm HK)

Mike Novogratz said the worst of the crypto crisis may yet unfold in the wake of the FTX stock market collapse. Galaxy, the crypto financial services company founded by Novogratz, disclosed $76.8 million in exposure to last week

Novogratz was speaking at a conference on Wednesday alongside Binance Holdings Ltd.’s Chief Executive Officer Changpeng “CZ” Zhao. Binance’s CEO said he saw a lot of interest from investors in a crypto industry recovery fund that he plans to set up to help otherwise strong projects facing liquidity issues.

Crypto Exchange AAX Needs Capital (17:55 HK)

Resuming operations on the AAX cryptocurrency exchange depends on whether it can raise funds, the company said. Hong Kong-based AAX suspended filming on Monday due to a system upgrade glitch.

“If AAX is unable to obtain financing to enable us to restart our operations, AAX is committed to starting legal proceedings to secure and ensure the distribution of assets,” the company said.

Most Bitcoin Retail Buyers Lost (2:20 PM HK)

A study of how retail investors use cryptocurrency exchange apps suggests that about three-quarters have lost money on Bitcoin, according to the Bank for International Settlements.

Data from 95 countries from 2015 to 2022 indicates that the vast majority of app downloads occurred when Bitcoin’s price was above $20,000, says the working paper from Basel, Switzerland-based BIS.

The world’s largest token is down more than 70% from a record hit about a year ago, under pressure from rapidly tightening monetary policy and a series of massive blowouts at crypto outfits, most recently FTX.

FTX Digital Markets Files for Chapter 15 (Afternoon HK)

Bahamas-based FTX Digital Markets Ltd. has filed a Chapter 15 petition seeking recognition of a foreign proceeding in the Southern District of New York, according to a filing on the court’s website.

It is a subsidiary of FTX Trading Ltd., which filed for Chapter 11 bankruptcy on November 11.

–With help from Amanda Fung, Sidhartha Shukla and Suvashree Ghosh.

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