The Ontario Teachers’ Pension Plan (OTPP), which oversees assets worth over $190 billion, has decided to steer clear of cryptocurrency investments following the loss of its entire $95 million investment in the now-defunct FTX cryptocurrency exchange, which collapsed in November 2022. OTPP invested in FTX twice; during the 2021 bull market and the Series C funding round in early 2022.
However, the exchange’s failure led to the pension fund losing its entire investment. The OTPP’s decision to avoid cryptocurrency investments is in line with its conservative investment strategy, which prioritizes stable returns and avoids high-risk ventures.
In an interview with the Financial Times, Jo Taylor, CEO of OTPP, warned pension funds to exercise caution when investing in emerging assets like digital currencies, referring to the ongoing assessment of FTX. Taylor noted that after conducting a thorough investigation of the exchange, they took their time to carefully consider the outcome. Unfortunately, they were not provided with all the necessary facts to make an informed decision.
OTPP provides pensions to over 330,000 teachers and school employees. The pension fund is now shifting its investment focus to more traditional areas such as real estate, as it seeks to enter the private credit market. The investment plan provider plans to invest 10 billion Canadian dollars ($7.4 billion) in these industries over the next three years to diversify its portfolio.
Another prominent pension fund, the Caisse de dépôt et placement du Québec (CDPQ), also suffered losses from the collapse of the cryptocurrency lender Celsius Network. The CDPQ invested $154.7 million in the company, which was among several cryptocurrency lenders that failed during the crypto market turmoil in the second quarter of 2022.
The collapse of FTX, the third-largest cryptocurrency exchange at the time, had significant repercussions for the entire crypto ecosystem. Crypto funding dried up, and investors and venture capitalists lost confidence in the cryptocurrency sector, leading to an all-time low in trust. The incident also drew scrutiny from regulators around the world and shifted the industry’s perception of widespread adoption.
It remains uncertain whether OTPP will recover its funds from FTX, but steps have been taken by the new CEO of FTX, John J. Ray III, to ensure creditors get their funds back. FTX EU, the European division of FTX, recently launched a new website that allows European users to request withdrawals for any remaining funds held by the exchange.
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