Ontario teachers’ fund loses $95 million due to FTX bankruptcy

Ontario Teachers’ shared their woes amid the FTX’s recent troubles after they invested a significant amount of funds in FTX International and its US entity (FTX.US). The pension company claims its investment is almost zero following FTX’s insolvency.

Reasons for Ontario teachers’ investment losses

According to reports issued by Ontario Teachers’ on November 10, 2022, the firm had invested a total of US$75 million in both FTX international and its US entity (FTX.US). The firm invested another US$20 million in FTX.US. in January same year. 

Ontario teachers have made a total of roughly US$95 million into the troubled crypto exchange

Ontario Teachers’ initiated these investments via their Teachers’ Venture Growth (TVG) platform, together with several global investors. They aimed at gaining small-scale exposure to an emerging area in the developing financial technology sector.

The Teachers’ Venture Growth (TVG) platform was launched in 2019 in a bid to invest in emerging technology companies, thus raising late-stage venture and growth capital. The platform works effortlessly to provide Ontario Teachers’ returns commensurable with the risk undertaken. TVG also has the capability of delivering proprietary insights that inform investing elsewhere across the Plan. 

Nonetheless, the firm claims that it is not guaranteed that all of the investments in this early-stage asset class will perform to expectations.

On the other hand, the platform has displayed phenomenal efforts to deliver on the intended objectives solidly.

Furthermore, Ontario Teachers’ seemed unfazed by FTX’s financial problems. That’s because although FTX’s future is uncertain, any losses the firm will encounter financially on their investment will have a limited impact on the Plan, given their investment only represents less than 0.05% of their total net assets.

FTX financial woes and the impact on Ontario teachers’ pension

FTX crypto exchange is currently facing financial instability, which has triggered a wave of customer withdrawals totaling billions of dollars. The firm fell short of funds to pay sellers, thereby imposing a hold on withdrawals altogether. As a result, the once-formidable empire crumbled following several scandals, adding that FTX had fluxed user assets with sister trading platform Alameda Research. 

Sam Bankman-Fred company‘s balance sheet was weighted heavily towards FTX’s native token, FTT, which has plummeted 85% over the past few days.

Olivia Steedman, TVG’s chair, had previously deemed the investments as a bet on digital assets infrastructure instead of any individual crypto. That’s why they believed the industry projected long-term growth, but that is now what happened.

The company’s board claimed that the funds lost from their FTX investments were only a tiny fraction, and the potential collapse of FTX would have had a limited impact. TVG manages roughly 282 billion Canadian dollars ($182 billion) in net assets on behalf of Ontario school teachers. 

In recent similar times of high volatility, there has been an increase in contribution requirements of teachers to help the fund make up losses; however, something has yet to be announced.

CDPQ, Canada’s second-largest pension fund, wrote off its $150 million investment in August in the now-bankrupt cryptocurrency lender Celsius, saying it went into crypto “too soon.”