Ontario Teachers Be More Cautious After Losing $95 Million Because Of FTX

Key Points:

• Ontario Teachers wiped down the whole $95 million investment in FTX after the ailing cryptocurrency exchange filed for bankruptcy.
• The fund said that it made a $75 million investment in FTX International and a $20 million investment in FTX.US.
• It is currently seeking fresh real estate opportunities.

The Ontario Teachers’ Pension Plan, one of Canada’s biggest pension systems with approximately $250 billion in assets under management (AUM), has announced that it is exiting the cryptocurrency market after writing down a $95 million investment in the bankrupt digital currency exchange FTX, according to the Financial Times.

According to a statement, the fund invested $75 million in FTX International and its US subsidiary in October 2021, followed by another $20 million in FTX.US in January of this year. According to the statement, the investments were made via Teachers’ Venture Growth (TVG) platform and accounted for less than 0.05% of the fund’s total net assets. The fund delivers pensions for around 330,000 teachers and school workers.

OTPP was one of many big-name money managers to support FTX, and the decision was generally seen as a hint that high-profile, blue-chip investors were endorsing the fast-growing but weakly regulated crypto industry.

Nevertheless, after FTX’s spectacular collapse in November 2022, OTPP wiped down its entire shareholding. Sam Bankman-Fried, the exchange’s high-profile founder, is now facing fraud accusations. Jo Taylor, CEO of OTPP, told the Financial Times:

“We’re still working through what exactly happened there and you’re going to be careful. It’d be unwise for us to rush.”

This isn’t the first time a significant Canadian pension fund has been entangled in the cryptocurrency-related epidemic. Caisse de Depot et Placement du Québec, which has over $300 billion in AUM, wrote down its entire $150 million stake in failing cryptocurrency lender Celsius Network in August.

“We took our time and did a lot of due diligence on the business. It didn’t turn out the way we thought,” said Taylor.

The fund is now looking for new possibilities in real estate, an asset sector in which it remains conservative as central banks across the globe struggle to manage inflation with aggressive rate hikes.

It intends to increase its investment in this sector by CA$10 billion over the next three years and is recruiting to support this effort, with real estate being a priority.

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Harold

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