Missouri state pension system lost money in crypto collapse tied to investment in FTX

The Missouri State Employees’ Retirement System lost roughly $1 million because a private equity firm it invested in was invested in FTX, the embattled cryptocurrency exchange that filed for bankruptcy last week.

T.J. Carlson, the pension fund’s chief investment officer, informed the retirement system’s board of the loss on Thursday, Missouri Treasurer Scott Fitzpatrick and another source familiar with the investment told The Star Friday.

Fitzpatrick is a member of the board because of his role as treasurer. He was elected Missouri auditor last week.

Fitzpatrick and the other source identified the private equity firm as BlackRock, a New York-based asset management firm, and said BlackRock had invested some of that money in FTX. The amount lost won’t affect MOSERS’ ability to pay pension benefits, Fitzpatrick said.

Candy Smith, a spokesperson for MOSERS, said in an email to The Star Friday that the system had roughly $1.2 million of exposure to FTX when the crypto company filed for bankruptcy. Smith said the loss is an estimated .01% of the MOSERS total portfolio exposure.

A representative from BlackRock declined to comment Friday.

MOSERS administers retirement, insurance and disability benefits for most state employees, including higher education staff, lawmakers, statewide elected officials and judges.

“Obviously, anytime a company goes bankrupt and Missouri pensions are invested in it, that is a concern,” state Sen. Denny Hoskins, a Warrensburg Republican and certified public accountant, said in a text to The Star Friday. “The fund managers may need to reevaluate their risk model.”

Last week, FTX, formerly one of the world’s largest cryptocurrency companies, experienced the crypto equivalent of a bank run — in which investors worried about the company’s financial position rushed to get their money out before it ran out of cash. The company’s rapid unraveling is expected to be one of the most complicated bankruptcy cases in years — the company listed more than 100,000 creditors on its filing.

The company’s downfall has sent ripple effects across several industries, including in sports, where FTX had a sponsorship deal with Major League Baseball. NFL quarterback Tom Brady and comedian Larry David are among the list of people accused of defrauding investors for promoting the company ahead of its collapse.

The Associated Press reported last week that the Department of Justice and the Securities and Exchange Commission were looking into FTX to determine whether any criminal activity or securities offenses were committed.

Buyouts, a publication that reports on the private equity industry, first reported MOSERS’ loss Thursday.

The money exposed to FTX is a small fraction of Missouri’s roughly $8.5 billion pension fund. Fitzpatrick told The Star that MOSERS investment staff would have made the decision to invest in the firm that, in turn, invested in FTX.

He compared the system’s financial loss to someone losing $10 on a $100,000 investment.

“MOSERS investment staff did not make the specific decision to invest MOSERS funds directly into FTX — there was a layer of separation there,” he said.

Last month, Missouri pulled $500 million out of pension funds managed by BlackRock after Fitzpatrick accused the company of prioritizing environmental, social and governance over shareholder returns. Fitzpatrick told The Star Friday that this was the state divesting of its public equity exposures to BlackRock. Private equity investments are on 10 year contacts and can’t be broken, he said.

A representative from the Missouri State Workers Union did not immediately return a call for comment Friday.

Sen. Josh Hawley, a Republican from Missouri, sent a letter to the heads of the Department of Justice, the Securities and Exchange Commission and the U.S. Commodities Future Trading Commission on Friday, asking the agencies to provide any documents between the agencies, the Biden administration and Democratic groups involving any correspondence about FTX, Almeda and its executives.

Hawley is alleging that the Democratic Party benefited from political contributions made by FTX’s founder, Sam Bankman-Fried, who donated $35.8 million to liberal groups in the 2022 election, according to the site Open Secrets. He was the sixth largest overall donor in the cycle and second largest Democratic donor.

Bankman Fried’s co-CEO, Ryan Salame, gave more than $18.8 million to conservatives, according to Open Secrets. He was the 14th largest overall donor in the cycle.

Hawley’s office did not immediately respond to a request for comment. Hawley, a former state attorney general, has between $1,000 and $15,000 invested in a MOSERS pension plan, according to his 2021 U.S. Senate Financial Disclosure report.