When FTX, the cryptocurrency exchange founded and run by Sam Bankman-Fried, filed for bankruptcy, big and small investors experienced significant losses.
Some of these investors had money in FTX and, to some extent, knew they were taking on risk by doing so. Other investors simply were invested in funds or even pensions and honestly had no clue of their exposure to such a toxic business.
One large group of investors who likely had no clue they were invested in FTX, or even cryptocurrencies of any kind, where those who are beneficiaries of the Ontario Teachers' Pension Plan.
After FTX filed for bankruptcy, the Ontario Teachers' Pension Plan announced that it would write down its entry stake in FTX to zero. The pension fund had $95 million invested in FTX, which is now essentially gone.
Furthermore, what makes this situation even slightly more painful, is that the Teacher's Pension manager just started investing in FTX in October of 2021 with an initial investment of $75 million and then added another $20 million in January 2022.
The date of the investments is important for two reasons. The first reason is that the whole investment has been lost just over a year from the initial investment. The second reason, and probably more important, is that the teachers who are part of the Pension fund didn't have much time to even realize they were invested in FTX.
I know what you are thinking, "they had a year to figure out their pension fund was invested in FTX." Yes, I understand the investment was a year old. However, funds don't have to disclose their holdings right when the purchases are made.
Furthermore, while most funds disclose their holdings quarterly, they are only required to do so yearly. I don't know how often the Ontario Teachers' Pension Fund announces its holdings, but if they disclose yearly, investors may have only been told about the initial $75 million invested in October 2021 and had not even been informed of the additional $20 million invested in January 2022.
None of that matters because I'm just using the Ontario Teachers' Pension Fund as an example. There are tons of private and publicly traded funds that you as an investor could have money tied up in, which may be investing in businesses that you wouldn't touch with a 10-foot, sorry, 100-foot pole. Continue reading "Teachers' Pension Debacle In FTX - Know What You Own"