August 11, 2023
WASHINGTON – More plaintiffs have been added to the United States class action suit involving Singapore state investor Temasek, along with more than a dozen backers of failed American cryptocurrency exchange FTX.
The amendment to include more plaintiffs was filed on Monday with the US District Court for the Northern District of California by five plaintiffs – Mr Leandro Cabo, Mr Vitor Vozza, Mr Kyle Rupprecht, Mr Warren Winter and Mr Sunil Kavuri.
Besides Temasek, venture capital firms Sequoia Capital, SoftBank and Sino Global Capital were also named as defendants in the lawsuit relating to fraud.
The lawsuit states that FTX violated several securities laws and stole customers’ funds, while the defendants offered an elusive picture of the exchange, claiming they had done their due diligence, reports said.
The plaintiffs are accusing the defendants of perpetrating, conspiring, aiding and abetting FTX’s multibillion-dollar fraud for the latter’s own financial and professional gain.
When asked, Temasek declined to comment.
It is understood that this lawsuit is the same as an earlier one filed in February.
In February, Temasek, together with 17 banks, venture capitalists and accounting firms, were sued for allegedly conspiring with FTX to defraud investors.
That 83-page class action lawsuit was filed in Miami, Florida, by FTX investor Connor O’Keefe, whose funds were frozen in his FTX account since the November collapse of the exchange. Venture capital firms Sequoia Capital and SoftBank Vision Fund were also named in the case.
In mid-November 2022, Temasek announced it would write off its US$275 million (S$377 million) investment in FTX, a week after the exchange filed for bankruptcy.
Two weeks later, Deputy Prime Minister Lawrence Wong, who is also Finance Minister, told Parliament that the Temasek write-off would not affect the stream of income from the reserves available for the Government’s Budget, or the Net Investment Returns Contribution.
In late May, Temasek said it would cut the pay of its investment team and senior management as a result of the FTX debacle, although no misconduct was found. The one-off pay cut has been carried out.
More recently, in mid-July, Temasek’s chief executive Dilhan Pillay said during the group’s annual review that the FTX blow-up was “an aberration” in early stage investments.
He noted that the investment team and senior management decided to take a pay cut because of the reputational damage Temasek has sustained from the FTX incident, particularly as the implosion came so soon after the investment was made. Temasek had pumped money into FTX across two funding rounds from October 2021 to January 2022.
When asked why no one was let go as a result of Temasek’s poor investment in FTX, Mr Pillay had made the point that no one would want to be an investor if people were punished beyond the pay cut.