The Ontario Teachers’ Pension Plan (OTPP) is taking a step back from the world of cryptocurrencies following the loss of its $95 million investment in the now-bankrupt crypto exchange FTX.
The collapse of FTX in November 2022 resulted in OTPP writing off its entire stake, leading to a more cautious approach to investing in emerging assets like digital currencies.
A cautionary tale in crypto investing
The OTPP, which manages over $190 billion in assets, had invested in FTX twice: once during the bull market in 2021 and again during the exchange’s Series C funding round in early 2022.
The failed investment has left the pension fund, responsible for providing pensions to over 330,000 teachers and school workers, reevaluating its stance on cryptocurrency investments.
OTPP Chief Executive Jo Taylor told the Financial Times that rushing into another crypto investment would be unwise, given the recent experience with FTX.
According to Taylor, the pension fund conducted extensive due diligence on FTX but was not shown all the necessary information to make a balanced decision. The collapse of the exchange has led to its founder, Sam Bankman-Fried, facing fraud charges.
The bigger picture: Learning from losses
OTPP is not the only Canadian pension fund that has been burned by cryptocurrency failures. Caisse de dépôt et placement du Québec (CDPQ), the country’s second-largest pension fund manager, wrote off a $150 million investment in crypto lending platform Celsius after its collapse last year. Like OTPP, CDPQ has since stated that it will end its foray into crypto.
In the aftermath of the FTX debacle, OTPP is now exploring new investment opportunities in real estate and private credit. The fund plans to expand its investment in private credit by CA$10 billion over the next three years, focusing on non-bank lending to private companies as flows of traditional capital dry up.
Real estate is also an area of interest, particularly in European markets such as the UK, Germany, France, Spain, and the Netherlands.
While the loss of OTPP’s investment in FTX was a significant blow, the pension fund was still one of the few global pension plans to deliver positive returns in 2022, thanks to its private market positions.
The experience has left OTPP, and other pension funds like it, much more cautious when it comes to investing in the volatile world of cryptocurrencies.
