Ontario Teachers’ Pension Plan Retreats from Crypto Investments after Loss

OTPP's Strategic Shift

The Ontario Teachers’ Pension Plan (OTPP), valued at $190 billion, has chosen to steer clear of the cryptocurrency industry. This decision follows a significant $95 million loss connected to their investment in FTX, a now-defunct digital currency exchange. The investment in FTX, made during 2021 and early 2022, was initially seen as a sign of the growing acceptance of cryptocurrency by reputable investors.

The FTX Collapse

In November 2022, OTPP decided to completely write off its investment in FTX after the exchange's dramatic downfall. FTX's founder, Sam Bankman-Fried, faces serious fraud accusations, casting further doubt on the viability of the investment. This situation prompted OTPP and other investors to reflect on their involvement in the crypto sector.

Emphasizing Caution

Jo Taylor, the CEO of OTPP, highlighted the importance of exercising caution moving forward. He emphasized the need to heed member feedback when considering future investments in the volatile cryptocurrency space. Taylor noted that while OTPP conducted thorough due diligence before investing in FTX, the necessary information to make an informed decision was not entirely available.

Lessons Learned

The challenges faced by OTPP are not isolated. Other Canadian pension funds, like Caisse de dépôt et placement du Québec, also experienced setbacks, writing off a $150 million investment in Celsius. Taylor acknowledged the lessons learned from these experiences and expressed regret over the losses incurred by members. This shift in strategy underscores OTPP's commitment to protecting its members' interests by avoiding high-risk investments.