- Ontario Teachers Pension Plan’s investment in FTX is being sold due to a liquidity crisis.
- There are ongoing discussions about competitor crypto exchange Binance acquiring FTX.
- The loss incurred by the fund due to poor crypto investments is not unique to this Canadian pension plan.
The Ontario Teachers Pension Plan placed a significant bet on crypto when it invested in FTX, one of the biggest crypto exchanges, in 2021. Currently, the exchange is being sold due to a liquidity crisis.
At that time, Ontario Teachers invested twice in FTX, taking part in each of its $400 million Series C rounds and its $420 million USD round from last October.
FTX is currently in talks to be acquired by rival cryptocurrency exchange Binance while the former business experiences a liquidity crisis.
The CEO of Binance announced that his business had signed a letter of intent that is not legally enforceable for Binance to buy FTX. The deal’s financial details have not been made public.
This afternoon, FTX asked for our help. There is a significant liquidity crunch. To protect users, we signed a non-binding LOI, intending to fully acquire https://t.co/BGtFlCmLXB and help cover the liquidity crunch. We will be conducting a full DD in the coming days.— CZ Binance (@cz_binance) November 8, 2022
The problems with FTX are a result of a general decline in cryptocurrency. Despite this turbulence, Ontario Teachers has recently maintained its FTX investment, calling it “certainly the lowest risk profile you can have.”
According to Reuters, Ontario Teachers CEO Jo Taylor stated in September that FTX was doing well and that the company was confident in its investment despite the unpredictability of the crypto market.
The fund is not the only Canadian pension investment firm that has recently suffered losses due to subpar crypto investment.
The Caisse de dépôt et placement du Québec contributed $150 million to Celsius’ $400 million USD funding round last year as part of its investment. Caisse made its first crypto investment in the purchase and held a 4% equity share in Celsius.
Celsius filed for bankruptcy in July 2022, and the Quebec-based pension fund wrote off its investment. Charles Emond, the CEO of Caisse, has now acknowledged that his company entered the crypto market “too early” and described it as a market in transition.
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