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What Filing for Chapter 11 Means for FTX
What Filing for Chapter 11 Means for FTX

Crypto Crash: Canadian Retirees Burn Their Fingers in Bitcoin

A Canadian pension fund managing money for teachers invested in the cryptocurrency exchange FTX, which has now filed for bankruptcy.
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Ontario Teachers' Pension Plan, Canada's third-largest pension fund, was also an investor in FTX, the popular cryptocurrency exchange that filed for bankruptcy on Friday.

The pension fund invested $75 million in FTX International and its U.S. entity, FTX.US, in October 2021. In January, the pension fund made an additional investment of $20 million in FTX.US.

The investment's impact is minimal because it represents less than 0.05% of the fund's total net assets. 

Both investments were made in U.S. dollars and through its Teachers’ Venture Growth (TVG) platform because the pension fund believed it needed to "gain small-scale exposure to an emerging area in the financial technology sector."

The pension fund said, "not all of the investments in this early-stage asset class perform to expectations."

The pension fund, which ranks among the top 20 globally in terms of assets, manages $242 billion in assets for 330,000 current and retired teachers.

The Canadian pension fund's investment was part of the $420 million that FTX raised in October 2021 that include other major investors such as Temasek, Sequoia Capital, Sea Capital, IVP, ICONIQ Growth, Tiger Global, Ribbit Capital, Lightspeed Venture Partners, and funds and accounts managed by BlackRock.

Last September, Ziad Hindo, the fund's chief investment officer, said the fund will focus on investing more in clean energy companies.

Unlike several U.S. pension funds, Ontario Teachers is not divesting from its oil and gas assets but stopped investing in public exploration and production companies in 2019.

The fund's portfolio includes investments of over $30 billion in renewable energy, electrification, electricity transmission, energy efficiency, energy storage, and green real estate.

FTX Investors Facing Total Losses

Investors in FTX, which was a popular exchange for digital assets and was once valued at $32 billion, are likely facing total losses since the company filed for Chapter 11 bankruptcy protection on Friday.

Sequoia sent a letter to its limited partners on November 9, stating that it now values the $210 million investment in FTX as $0 and that it was a total loss.

"Based on our current understanding, we are marking our investment down to $0,” the Silicon Valley-based firm said. “The fund remains in good shape,” it said in a statement posted on its Twitter account

The Securities Commission of The Bahamas froze the assets of FTX Digital Markets on Nov. 10, and appointed a liquidator, Brian Simms, to manage the assets held by the exchange, which is based in the Bahamas,

The regulatory agency also halted the transfer of the crypto held by FTX, stating "the powers of the directors of FDM have been suspended and no assets of FDM, client assets or trust assets held by FDM, can be transferred, assigned or otherwise dealt with, without the written approval of the provisional liquidator."

Sam Bankman-Fried, the institutional face of the crypto sphere who owns FTX and trading platform Alameda Research, resigned as CEO on Friday.

Binance, which is run by Bankman-Fried rival Changpeng Zhao, reversed course on November 10, backing out of a plan to salvage FTX from its liquidity crisis by acquiring it.

Bankman-Fried, who only days before was a multi-billionaire, had acknowledged that FTX was almost out of cash.

The situation was caused by massive withdrawals from customers on November 6 after Binance announced its decision to sell $500 million worth of FTT, the cryptocurrency issued by FTX following press reports on the group's financial health.

"We saw roughly $5b[illion] of withdrawals on Sunday--the largest by a huge margin," Bankman-Fried said.