$190B Ontario pension fund shuns crypto assets following FTX investment loss

Two investments by the pension fund were made in the defunct cryptocurrency exchange. The first investment was made in early 2022, and the second was made in 2021, during the height of the bull run.

The Ontario Teachers’ Pension Plan has abandoned cryptocurrencies in favor of more traditional investments. The decision was made in response to the pension plan losing all $95 million that it had invested in the now-defunct FTX cryptocurrency exchange, which filed for bankruptcy in November 2022.

The collapsed cryptocurrency exchange was funded by a number of investors, including OTPP, which controls an asset portfolio worth over $190 billion. OTPP made two investments—once during the 2021 bull market and then in early 2022 as part of FTX’s Series C funding round.

Jo Taylor, the CEO of OTPP, said in a Financial Times article that the pension fund will proceed cautiously before making another cryptocurrency investment. After the exchange incident, he stated that it would be foolish to invest immediately in emerging assets such as digital currencies and that they are still assessing the situation. The pension fund, which offers pensions to more than 330,000 educators, is being more careful in its investment choices.

“We investigated the company thoroughly and took our time. The outcome wasn’t what we had anticipated. Not all of the information required for us to make an informed decision was necessarily provided to us.”

What is the Pension Fund doing about this?

The pension fund has decided to shift its investment focus towards conventional markets, specifically real estate, and is interested in exploring opportunities in the private credit sector. The provider of the investment plan aims to allocate 10 billion Canadian dollars ($7.4 billion) over the next three years towards building a diversified portfolio in these sectors.

Along with OTPP, another well-known pension fund, Caisse de dépôt et placement du Québec (CDPQ), also lost all of its $154.7 million investment in the problematic cryptocurrency lender Celsius Network. Several cryptocurrency lenders, including Celsius, failed amid the crypto contagion in the second quarter of 2022.

FTX, which was the third-largest cryptocurrency exchange at the time, experienced a significant collapse that had far-reaching effects on the entire ecosystem. This event eroded the trust of investors and venture capitalists in the cryptocurrency industry, leading to a decrease in funding for crypto-related projects. Additionally, the incident shifted the narrative of the crypto community regarding mass adoption and drew increased regulatory attention worldwide.

Key Keyaway

• The pension fund invested twice in the now-defunct FTX cryptocurrency exchange, first in early 2022 and then during the 2021 bull market.
• Following the collapse of FTX, the pension fund has abandoned cryptocurrency investments in favor of more traditional investments.
• The pension fund is being cautious about future investments in emerging assets like digital currencies and is assessing the situation carefully.

Signing Out

The Ontario Teachers’ Pension Plan lost all $95 million invested in the defunct FTX exchange and has decided to abandon cryptocurrencies in favor of traditional investments like real estate and private credit. The pension fund is cautious about future investments in digital currencies. The collapse of FTX and other cryptocurrency lenders has eroded trust in the industry, leading to decreased funding for crypto-related projects and regulatory attention worldwide.