By: Toh Han Shih
Two of Asia’s biggest investment firms have found themselves swindled by eFishery, an Indonesian “unicorn” supposedly providing technology and data to improve the operations of fish and shrimp farmers, likely forcing them to write off an unknown amount. It is the second major recent writedown for the Singapore government’s sovereign investment fund Temasek Holdings and the Tokyo-based Softbank investment firm, both of which also lost millions in the 2022 failure of the once-glamorous FTX Trading Ltd, the bankrupt cryptocurrency exchange and hedge fund whose founder, Sam Bankman-Fried, is now serving a 25-year prison sentence.
Before the fraud allegations surfaced, eFishery was valued at more than US$1 billion, making it a unicorn (a non-listed firm worth more than that amount), after securing US$200 million from various investors including Temasek and Softbank, while FTX was valued at US$32 billion. Investigators believe some officers of eFishery, which was founded in 2013, inflated revenue by almost US$600 million, meaning more than 75 percent of its reported 2024 figures were bogus.
“Temasek’s record on picking out these unicorns is looking pretty weak these days. Clearly, Temasek needs to do more due diligence before putting its money on the table,” Steve Vickers, the founding chief executive officer (CEO) of Steve Vickers Associates, a Hong Kong-headquartered risk consultancy, told Asia Sentinel.
Temasek’s investment portfolio value was S$389 billion (US$287 billion) as of March 31, 2024, according to its website. Softbank is a Japanese investment holding company listed on the Tokyo Stock Exchange, with revenue of ¥6.08 trillion (US$40 billion) in 2024, according to its website.
The Indonesian police’s criminal investigation agency, the police of the Indonesian capital Jakarta, and the Indonesian Financial Services Authority are investigating allegations of fraud at eFishery, reported Tempo, an Indonesian publication, on February 8.
“Big institutions should know better, but their staff are clearly just as likely to find themselves caught up in the hype as retail investors. Deal teams are also often under intense pressure to generate returns,” said Vickers.
Gibrain Huzaifah, the chief executive officer (CEO) and co-founder of eFishery, and another co-founder and its chief product officer, Chrisna Aditya, were suspended last December following an internal investigation into the alleged financial irregularities. The results of the investigation were published in a draft report by FTI Consulting, a US consultancy, which was circulated among investors. The report surfaced in the public domain in January, which implicated more senior executives, besides Huzaifah and Aditya, in the scandal.
“This fraud is not just a case of a souring bet. Rather, it is the result of collusion in inflating revenues by the management of the company.” Vickers pointed out.
The FTI report found falsified accounting occurred in eFishery since at least 2021. For the first nine months of 2024, the revenue of three subsidiaries of eFishery was inflated fivefold, where US$596 million of revenue was faked.
For three of its Indonesian subsidiaries, eFishery told investors that its pre-tax profit was Rp156 billion (US$9.5 million), Rp165 billion, and Rp261 billion in the fiscal years of 2022 and 2023 and the first nine months of 2024 respectively, when it actually suffered a pre-tax loss of Rp784 billion, Rp759 billion and Rp578 billion respectively, according to the report. For these three subsidiaries, the company told investors that its revenue was Rp5.78 trillion, Rp10.83 trillion, and Rp12.82 trillion in the fiscal years of 2022 and 2023 and the first nine months of 2024, when its actual revenue was much less at Rp4.26 trillion, Rp6.03 trillion and Rp2.56 trillion rupiah respectively.
The Indonesian company claimed to have more than 400,000 feeders, but the FTI report put the actual number closer to 24,000. The grossly inflated revenues occurred despite eFishery hiring leading international auditors like PwC and Grant Thornton.
Commenting on Temasek’s investment in eFishery, an Indonesian firm, Mak Yuen Teen, a professor of accounting at the National University of Singapore, said a month ago on LinkedIn, “Temasek didn’t think this may be fishy?”
In a statement in late January, eFishery said, “We are fully aware of the gravity of the market speculation, and we take this matter with the utmost seriousness. We remain dedicated to upholding the highest standards of corporate governance and ethics in all of eFishery’s operations.”
Mak, a Singaporean corporate governance advocate, commented two weeks ago on Linkedin on eFishery’s statement, “I’ve yet to see a company say they uphold low standards of corporate governance and ethics. So fishy still can say this.”
The Indonesian unicorn did not reply to Asia Sentinel’s questions.
In May 2023, eFishery raised US$200 million in a fourth round of fund raising (series D funding), which raised its valuation to US$1.4 billion, making the Indonesian firm the first startup in the global aquaculture industry to reach a US$1.4 billion valuation, according to media reports. The investors in this round of funding included Temasek, Softbank, and KWAP, the Malaysian statutory body which manages the pensions of Malaysian public servants. In January 2022, eFishery raised US$90 million in a third round of funding (series C funding) led by Temasek, Softban,k and the Indian unit of Sequoia Capital, a leading Silicon Valley venture capital firm.
“As so often, the valuation turned out to be “too good to be true” – but investors wanted to believe the tales they were told,” Vickers commented.
“This scandal undermines investor trust in Indonesia’s startup scene,” tweeted Ganesha Business Management Festival 2025, an Indonesian business festival, on February 1.
“Indonesia is working to become a leading startup center in Southeast Asia. Situations like this can damage trust with foreign investors, making it more difficult for startups to secure funding.” Ganesha added.
Temasek declined to comment on its investments in eFishery.
FTX
In a statement on November 26, 2022, Temasek said it had written down its entire investment of US$275 million in subsidiaries of FTX. From October 2021 to January 2022, Temasek invested US$210 million for a stake of about one percent in FTX International, an international unit of FTX, and invested US$65 million for a stake of about 1.5 percent in FTX US, a US subsidiary of FTX. The cost of Temasek’s investment in FTX was 0.09 percent of its net portfolio value of S$403 billion as of March 31, 2022, according to the Singapore sovereign wealth fund’s statement.
Temasek said in its statement on November 26, 2022, “There are inherent risks whenever we invest, divest, or hold our assets, and wherever we operate. While this write down of our investment in FTX will not have a significant impact on our overall performance, we treat any investment losses seriously and there will be learnings for us from this. We will continue to remain prudent and exercise caution even as we explore opportunities.”
Softbank declined to comment on its investments in eFishery and FTX. In November 2022, Softbank disclosed it had written down its entire investment in FTX of nearly US$100 million.
FTX, once the world’s third largest cryptocurrency exchange valued at US$32 billion, filed for bankruptcy protection in the US in November 2023, Asia Sentinel reported on January 5, 2023. Fraud was found in the company, which was incorporated in the Bahamas with operations in the US and Hong Kong previously. Samuel Bankman-Fried, the former CEO and co-founder of FTX, was sentenced to 25 years in prison in the US on March 28, 2024. The 34-year-old American man appealed against his conviction and sentencing, which was rejected by the US Court of Appeals last December.
In a US court in November 2024, another FTX co-founder, Gary Wang, was spared jail but ordered to forfeit US$11 billion of ill-gotten gains. In October 2024, Nishad Singh, a former head of engineering at FTX, was sentenced to three years of supervised release by a US court. In September 2024, Bankman-Fried’s former girlfriend, Caroline Ellison, a former CEO of Alameda Research, a cryptocurrency trading firm related to FTX, was sentenced to two years in prison in the US.
In May 2024, Ryan Salame, a former co-CEO of FTX, was sentenced to 7.5 years in prison in the US.
“As always, the best way to protect investors’ interests is to do proper due diligence,” said Vickers.
Toh Han Shih is a Singaporean writer in Hong Kong and a regular contributor to Asia Sentinel
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