Temasek Among Companies Accused of Aiding FTX Fraud in Class Action Lawsuit

Picture Source: BeInCrypto

The aftermath of the FTX cryptocurrency exchange collapse has taken a new turn as international investment firm Temasek, owned by the Singaporean government, faces a United States class action lawsuit. The lawsuit alleges that Temasek and several other companies did not exercise proper due diligence before partnering with FTX, ultimately aiding and abetting the exchange’s alleged multibillion-dollar fraud. In this article, we delve into the unfolding legal dispute, the accusations against Temasek, and the broader implications for the cryptocurrency industry.

Accusations Against Temasek and Others

The class action lawsuit filed on August 7 alleges that Temasek, along with 17 other companies, played a role in promoting and aiding FTX’s alleged fraudulent activities. The lawsuit asserts that these companies used their influence and resources to contribute to the expansion of FTX’s operations, despite the alleged lack of proper due diligence. Among the allegations is the claim that FTX Group illegally sold securities without proper registration, potentially depriving investors of crucial financial and risk-related disclosures.

Temasek’s Troubles and Controversy

Already grappling with a $6 billion net decline in portfolio value from a year ago, Temasek now faces legal turmoil over its alleged involvement with FTX. The lawsuit accuses the investment firm of assisting in the growth of what is described as a “house of cards” orchestrated by FTX. The suit further contends that Temasek and others were complicit in securities law violations.

Temasek’s defense rests on its assertion that it conducted a comprehensive financial audit of FTX in 2021 and found no concerns. However, the subsequent collapse of FTX raises questions about the efficacy of their due diligence process.

FTX’s Founder and Leadership Role

FTX’s founder and former CEO, Sam Bankman-Fried, played a prominent role in the crypto industry prior to the exchange’s downfall. Bankman-Fried, often touted as a symbol of the industry’s transformation from the fringes to mainstream recognition, faced allegations of misappropriation of funds. Prosecutors claim that he stole billions of dollars in FTX customer funds, some of which reportedly flowed into his Alameda Research hedge fund.

Temasek’s association with Bankman-Fried was not without misgivings. The investment firm cited its belief in his “actions, judgment, and leadership” as a rationale for investing in FTX. However, it later admitted that this faith was “misplaced.”

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The FTX scandal continues to unravel, drawing in high-profile entities like Temasek and shedding light on the challenges of due diligence in the rapidly evolving cryptocurrency industry. As Temasek and other companies face legal action, the aftermath of FTX’s collapse serves as a cautionary tale for both investors and industry leaders. With Bankman-Fried’s trial set to begin in October, the case will likely have far-reaching implications for the cryptocurrency sector’s transparency, credibility, and regulatory considerations.

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