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Ontario Teachers Pension sticks with FTX Trading amid crypto volatility

Ontario Teachers Pension sticks with FTX Trading amid crypto volatility

Reuters · 09/13/2022 13:15
Ontario Teachers Pension sticks with FTX Trading amid crypto volatility

By Divya Rajagopal

- Canada's Ontario Teachers Pension Plan's (OTPP) bet on crypto exchange operator FTX Trading carries the lowest risk in the entire crypto asset class and its investment in the firm has grown well in uncertain times, the OTPP said last week.

Canada's third-largest pension fund OTPP, which oversees C$242 billion ($185 billion), invested in FTX Trading in 2021 as part of a $420 million funding round, along with Tiger Global, Sequoia and Light Speed Venture Partners.

"In terms of the risk profile, it is probably the lowest risk profile you can have in that it's everybody else is trading on your platform," OTPP CEO Jo Taylor told Reuters last week.

He added that business is performing well and declined to comment on the size of OTPP's investment or the equity stake.

Founded in 2019 by 30-year old billionaire Sam Bankman-Fried, FTX Trading was valued at $25 billion in the last funding round.

Taylor's comments follow Caisse de dépôt et placement du Quebec's August announcement that it was writing off its entire $150 million investment in crypto lender Celsius Network after the company filed for bankruptcy this year.

Taylor said the investment in FTX Trading is part of its strategy to learn about the crypto business and whether it gives the right balance of risks and returns.

"I don't think we have the answer to that question yet," Taylor said.

Crypto currencies have been under pressure this year, with the price of flagship currency bitcoin crashing by half, dragging down other digital currencies.

Despite the downturn, some large institutional investors have continued to bet on this asset class. In August, BlackRock Inc BLK.N announced a spot bitcoin trust that gives its U.S. institutional investors access to trading in the digital currency.

OTPP has bucked the downward trend of equity market and high interest rate to report a 1.2% return in the last six months, as it reduced exposure in the fixed income assets.

But Taylor said high inflation would make it difficult to achieve the annual gains of 10% from the last five or six years in the 24 months.

"That's to say we won't strive to do it," Taylor said. "But the challenge is that there are only few asset categories giving that similar rate of return."

($1 = 1.2968 Canadian dollars)


(Reporting by Divya Rajagopal; Editing by Josie Kao)

((divya.rajagopal@thomsonreuters.com;))