- OTPP faces a lawsuit over $95M FTX investment, citing lack of due diligence.
- Claims include breaches in evaluating FTX’s governance and controls.
- OTPP denies allegations, stating the investment was minimal and strategic.
OTPP Faces Lawsuit Over FTX Losses
An Ontario Teachers’ Pension Plan (OTPP) member has filed a lawsuit against the board, alleging improper due diligence in its $95 million investment in FTX, now defunct.
The claim, filed in Ontario Superior Court, targets two investments in FTX, the cryptocurrency exchange, citing a breach of fiduciary duty. The lawsuit seeks to recover losses, claiming the board failed to secure reliable information on FTX’s management, governance, and cybersecurity.
In a statement, OTPP denied the allegations, calling the claim baseless. “We take investment responsibilities seriously and conduct robust due diligence on private investments,” said an OTPP spokesperson.
Poor Internal Controls
The lawsuit also accuses the board of violating the plan’s investment policy, which requires evaluating risks tied to governance and responsible investing. A year after OTPP’s initial $75 million investment in October 2021, FTX filed for bankruptcy. Another $20 million investment followed in January 2022, with the entire stake written down by November 2022.
Court documents highlight FTX’s poor internal controls and allegations of customer fund misappropriation. OTPP’s investments in FTX represented 0.05% of its net assets and a small ownership in FTX entities.
The investments were part of OTPP’s Venture Growth platform to explore emerging fintech opportunities. OTPP expressed support for regulatory reviews into FTX’s failure, citing concerns over reported fraud.
The allegations remain unproven in court.
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