“Immediate investment in the cryptocurrency space is unwise”
Canada’s Ontario Teachers’ Pension Fund (OTPP) appears to have refrained from investing in the cryptocurrency sector after the collapse of cryptocurrency exchange FTX. 21, the Financial Times reported.
OTPP is a fund that provides pensions for about 330,000 teachers and school workers. OTPP CEO Joe Taylor said it would be unwise to invest in the cryptocurrency sector too soon.
As a background, OTPP posted a loss of about 13 billion yen due to purchasing shares of FTX, which went bankrupt in 2022. At the time, OTPP explained that its impact on the fund would be “limited” given the size of the investment relative to its total net assets, but that it hoped to learn from the experience.
It should be noted that OTPP is one of the few pension funds that, while losing money on FTX, has delivered positive returns in 2022, when both stocks and bonds were sluggish.
connection: Canada’s pension fund posted a loss of about 13 billion yen due to the FTX bankruptcy
FTX with insufficient information disclosure
Joe Taylor continues his investment in FTX:
We’ve done a lot of risk scrutiny on FTX over time. However, the result did not go as we expected.
It didn’t necessarily provide all the information needed to make a balanced decision.
FTX filed for bankruptcy in the US by Chapter Eleven. Since then, various problems have been discovered, such as the company’s sloppy management system, the lack of proper financial records, and the misappropriation of customer funds by sister companies.
connection: FTX US hearings reveal extremely sloppy management and criminality
Chapter 11 of the U.S. Bankruptcy Code (Chapter 11)
A reconstruction-type bankruptcy legal system similar to the Civil Rehabilitation Law of Japan. The company will be restructured by reducing debts while continuing to operate. Debt collection will be suspended after the application, and the debtor will work on debt consolidation and formulate a reconstruction plan within 120 days in principle.
Canadian Crypto Situation
In Canada, besides OTPP, CDPQ, a major pension fund, was also affected by its investment in Celsius, which filed for bankruptcy in Chapter 11, as was FTX. It is judged that it will be difficult to recover the approximately 20 billion yen invested in Celsius.
In December 2022, after a series of bankruptcies of cryptocurrency companies, it was reported that Canada’s largest pension fund CPP Investments, which manages about 53 trillion yen, also dissolved the team to consider cryptocurrency investment.
connection: Canada’s largest pension fund ends consideration of cryptocurrency investment
In December 2010, the Canadian Securities Authority (CSA) banned virtual currency exchanges from offering margin trading and leveraged trading following the FTX bankruptcy. We have just requested separate management of customer assets.
“Cryptocurrencies are high-risk investments,” it said, citing the possibility of exchanges not fulfilling their promises, interconnectedness within the sector, bankruptcies, hacking and price volatility.
connection: Canada to ban cryptocurrency margin trading