SINGAPORE: It was in 2019 when Mr George Tan, a retiree, first dipped his toes into cryptocurrency. At the time, the crypto market was still reeling from a crash in 2018 – Bitcoin alone had tumbled more than 80 per cent that year after an astronomical rise of nearly 2,000 per cent in 2017.
Regulators in Singapore had repeatedly warned of the high risks and volatility of cryptocurrency trading.
Being cautious, Mr Tan took up various courses on blockchain and crypto mining so that he could better understand how the market worked. Convinced of the technology's potential, he began investing in a range of cryptocurrencies through a dollar-cost averaging strategy.
Over time, he invested nearly S$23,000 (about US$17,893), building a portfolio largely made up of XRP and bitcoin cash that is currently worth around S$50,000.
But these impressive paper gains have turned hollow after the Singapore-based trading platform he was using, known as Tokenize Xchange, abruptly ceased operations and has come under police investigation.
Trouble began in mid-July when Tokenize Xchange announced it would cease its Singapore operations after failing to secure a digital payment token licence from the Monetary Authority of Singapore (MAS). The platform had been operating under a temporary exemption.
For Mr Tan, things went south quickly on Aug 1 when the authorities said they were investigating AmazingTech, the operator of Tokenize Xchange, for potential offences including fraudulent trading. MAS noted that it found indications of “false representations” made by the firm over the segregation of customers’ assets.
Hong Qi Yu, a director of AmazingTech and the founder-CEO of Tokenize Xchange, was charged on Jul 31 with fraudulent trading.
“When I saw that news (on Aug 1), my heart sank,” said Mr Tan, who is in his 60s. “This is serious.”
Users told CNA how they were blindsided by recent developments. Tokenize Xchange never had issues with trading or making withdrawals on the crypto exchange, they said.
The company, which was founded in 2017, appeared to be growing, having expanded into regional markets such as Malaysia where it was among the first three digital asset exchange operators to receive full approval from the Securities Commission Malaysia in April 2020.
Last year, it secured an additional US$11.5 million in funding and had plans to expand its team in Singapore to focus on enhancing compliance and operations, according to various media reports.
As recently as Jul 8, roughly one and a half weeks before its shutdown, an email titled “Important regulatory updates from Tokenize Xchange” was sent out to users stating that the platform had secured a licence to operate in Labuan, a federal territory in Malaysia, and was in the “final phase” of obtaining another from the Abu Dhabi Global Market, a financial zone located in Abu Dhabi.
In Singapore as well, it was in “final discussions” with regulators regarding its licensing status, according to the email seen by CNA.
In an earlier statement, MAS said it had rejected Tokenize Xchange’s application for a digital payment token licence on Jul 4. It added that sufficient notice would be given to unsuccessful applicants before a final decision is issued.
It is unclear how many users Tokenize Xchange has. An interview that Hong Qi Yu, a graduate of the Nanyang Technological University, did with online content site Vulcan Post in 2021 cited the chief executive as saying that Tokenize Xchange had “close to 200,000 users globally” then.
But a press release issued by the firm in Mar 2022 said the platform had more than 100,000 customers across Malaysia, Singapore, Thailand and Vietnam.
Jul 20: News broke that Tokenize Xchange will be ceasing operations in Singapore and is putting in place a phased withdrawal process for users. This comes after the Monetary Authority of Singapore’s (MAS) decision not to grant it a licence to offer digital payment token services here.
Emails sent to users showed that users were first notified of the exchange's closure on Jul 17.
Jul 25: MAS said it was monitoring the return of money and assets from Tokenize Xchange to its customers. In its reply to CNA, the regulator also revealed that it rejected Tokenize Xchange's application for a digital payment token license on Jul 4.
Aug 1: AmazingTech, the operator of Tokenize Xchange, and its related companies are being probed by the Commercial Affairs Department for potential offences, including fraudulent trading, the Singapore Police Force and MAS said in a joint statement.
MAS said it had received several customer complaints in mid-July over delays in processing withdrawals of funds and digital payment tokens. Engagements with Tokenize Xchange showed “indications that (the firm) did not have sufficient assets to meet its customers’ claims and that it might not have segregated its customers’ assets from AmazingTech’s assets”.
The regulator also found indications that the firm may have made false representations over the handling of customers' assets when it applied for a major payments institution licence.
MAS then referred the company to the Commercial Affairs Department for investigations, the joint statement said.
Hong Qi Yu, a director of AmazingTech and the founder-CEO of Tokenize Xchange, was charged on Jul 31 with fraudulent trading. The offence carries an imprisonment term of up to seven years, a fine, or both.
Aug 15: A group of seven investors succeeded in getting the High Court to have AmazingTech placed under interim judicial management. Corporate advisory and restructuring firm KordaMentha has been appointed as the interim judicial managers who will take over the running of the company.
The interim judicial managers will have to submit a report on the company’s situation to the High Court by Sep 10.
A hearing for a judicial management application will be held no later than Sep 15.
Collapse Expand
Tokenize Xchange first notified users of its shutdown in Singapore on Jul 17, alongside a phased withdrawal process.
For example, those with portfolio values under S$10,000 can withdraw or transfer their assets from Jul 17 until Jul 31.
Customers with portfolios between S$10,000 and S$99,999 can do so from Aug 1 until Aug 31, while those whose portfolios are worth S$100,000 or more can withdraw their assets from Sep 1 to Sep 30.
According to the email seen by CNA, Tokenize Xchange said it was “privileged to have served thousands of Singapore users”, and pledged to keep any disruptions due to its operational changes to a minimum.
But to date, users that CNA spoke to have not been able to retrieve their funds. Enquiry emails to Tokenize Xchange have gone unanswered, leaving them in anxiety over the fate of their investments.
One user, Penny, started using the trading platform in end-2021 and had as much as S$18,000 invested in stablecoins, bitcoin and Luna at one point.
The 31-year-old sales executive began trimming her crypto investments during the mass selloffs in 2022 and 2023, following the crash of big players such as US exchange FTX and hedge fund Three Arrows Capital.
At present, her portfolio stands at S$4,000, hence qualifying her as one of those who could initiate withdrawals from Jul 17. But up till now, the status of her withdrawal request remains as “in transit”.
Penny, who declined to provide her full name, said a close friend had recommended her to Tokenize Xchange. Until the news broke last month, she was not aware that the platform was operating on a temporary licence exemption here.
“That’s my oversight. I thought that if a platform could operate for so long in Singapore, it must be safe,” she said.
“I also never had issues when I cashed out over the years, so I never felt that anything was amiss.”
Mr Tan the retiree said he knew that Tokenize Xchange's licence in Singapore was still pending approval, but he was not too alarmed at the time as several businesses were similarly granted exemptions.
He also attended the initial exchange offering of Tokenize Xchange around end-2018, and thought that the start-up with its local presence had seemed promising.
“With Tokenize Xchange, I felt safe because the founder is from a local university and is based in Singapore,” Mr Tan said. “That gives me some assurance that if anything happens, at least there’s a physical person or office here, versus some of the other crypto exchanges which are offshore.”
On hindsight, Mr Tan said alarm bells did ring for him in end-June when he noticed a sharp plunge in the value of Tokenize Xchange’s own token. TKX, as the token is called and largely used for rewards programmes offered by the crypto exchange, had fallen from a peak of US$47.97 on Jan 4 to around US$24.85 by Jun 30.
By mid-July, TKX's value had further tumbled to around US$6.
Mr Tan wrote to Tokenize Xchange on Jul 17 to express his concerns but received no reply. Out of caution, he sold a small portion of his investments and withdrew about S$500 from his account that evening.
Just after 9pm, users in Singapore would receive the fateful email informing them of the crypto exchange's immediate winding down of operations here.
By then, all trading and withdrawals via the platform had been disabled.
On MAS’ website which carried a list of entities operating under an exemption from holding a licence under the Payment Services (PS) Act, the financial regulator said the exemption applied to those that were carrying out businesses providing regulated payment services prior to the roll-out of the new laws in 2020.
The exemption would end when the licence applications were approved, rejected or withdrawn.
MAS noted that that those operating under the temporary exemption “are neither licensed under the PS Act to provide the specific payment services, nor at any time supervised or regulated by MAS”. This means that customers of these entities are not protected by regulatory safeguards.
Professor Lawrence Loh, director of the Centre for Governance and Sustainability at the National University of Singapore’s business school, said the exemptions came about as the authorities needed to strike a balance and be fair to businesses when new laws are rolled out.
While that may have created a “false sense of security” for some, the nature of the exemptions and its risks were stated publicly.
“Investors must do their homework before ... deciding where to put their money,” said Prof Loh. “Remember, ‘high risks, high return’ do not always mean positive returns. It can be a negative impact too.”
Given the current situation with a police probe ongoing, those affected may want to “wait it out” for a verdict.
“If it is established that there is fraud, they will be able to ride on that verdict and file for damages. But otherwise, they may have to brace for the worst-case scenario that they might not be able to get their investments back,” Prof Loh said.
Some users are already taking things into their hands. Last week, a group of seven users succeeded in getting the High Court to place AmazingTech under interim judicial management.
This means that corporate advisory and restructuring firm KordaMentha has now taken over the running of the company and its assets.
The interim judicial managers said they are now in the process of understanding the firm’s financial and operational situation. As part of stabilising business operations, all deposit withdrawals have been temporarily suspended, according to a document published on KordaMentha’s website.
“As the interim judicial managers continue to evaluate viable options and determine the most effective course of action to protect and secure the company’s assets, no transactions involving Tokenize Exchange will be permitted at this time,” it said.
The High Court has directed the interim judicial managers to submit a report on the company’s situation by Sep 10. A hearing for a judicial management application will be held no later than Sep 15.
File photo of Mr Hong Qi Yu, chief executive officer and founder of Tokenize Xchange.
BR Law’s director P. Sivakumar said having the firm placed under interim judicial management “does not necessarily mean that it is a worst-case scenario for investors”.
He noted that the purpose of doing so is to help “preserve all or part of the business of AmazingTech as a going concern” so that the interest of the company’s creditors are better preserved.
“In other words, the purpose of any judicial management order is to ensure a more advantageous realisation of AmazingTech’s assets than if AmazingTech was wound up,” said Mr Sivakumar.
However, if the application for judicial management is turned down or the judicial management is unsuccessful hence leading to the firm being wound up, the company’s assets “would be distributed pari passu to all unsecured creditors”.
“Depending on the size of the pool of assets available for distribution, the dividend of any creditor may be cents on the dollar,” Mr Sivakumar said.
Amid the uncertainty, many of those affected have turned to each other for support.
Penny, for one, started a group on messaging app Telegram, with the hope of allowing users to share updates and advice as they grapple with questions over what has happened and a likely prolonged wait over the fate of their investments.
“I started this on Jul 18 after I saw the news. I was very lost and I figured there will be others like me,” she said.
For Mr Tan, the past few weeks have been an emotional rollercoaster but he has no intention of letting his family know as he does not want to worry them. As such, he declined to reveal his exact age to CNA.
Looking back, the retiree said through his years of investing, he had tried to be careful. In this case, he had spent thousands of dollars taking up courses and doing his own homework.
But there was one area where he got complacent.
“The biggest take away for me is to always transfer your crypto to an external cold wallet. If it is not in your own wallet and in custody with somebody else, it’s not truly yours.”
“It’s a bit troublesome because you have to transfer out each time, and when you want to sell, you have to transfer back to the exchange. Every time you transfer, you got to pay a fee, so that’s where I got complacent,” he said, with a sigh.
While he continues to monitor the developments, Mr Tan said he does not hold much hope of getting his investments back, which would be a dent to his retirement savings.
“Every day I tell myself, just write it off because if I place too much hope, I don’t know how to pass the day. So, I just take it as it’s gone.”
Continue reading...
Regulators in Singapore had repeatedly warned of the high risks and volatility of cryptocurrency trading.
Being cautious, Mr Tan took up various courses on blockchain and crypto mining so that he could better understand how the market worked. Convinced of the technology's potential, he began investing in a range of cryptocurrencies through a dollar-cost averaging strategy.
Over time, he invested nearly S$23,000 (about US$17,893), building a portfolio largely made up of XRP and bitcoin cash that is currently worth around S$50,000.
But these impressive paper gains have turned hollow after the Singapore-based trading platform he was using, known as Tokenize Xchange, abruptly ceased operations and has come under police investigation.
Trouble began in mid-July when Tokenize Xchange announced it would cease its Singapore operations after failing to secure a digital payment token licence from the Monetary Authority of Singapore (MAS). The platform had been operating under a temporary exemption.
For Mr Tan, things went south quickly on Aug 1 when the authorities said they were investigating AmazingTech, the operator of Tokenize Xchange, for potential offences including fraudulent trading. MAS noted that it found indications of “false representations” made by the firm over the segregation of customers’ assets.
Hong Qi Yu, a director of AmazingTech and the founder-CEO of Tokenize Xchange, was charged on Jul 31 with fraudulent trading.
“When I saw that news (on Aug 1), my heart sank,” said Mr Tan, who is in his 60s. “This is serious.”
Users told CNA how they were blindsided by recent developments. Tokenize Xchange never had issues with trading or making withdrawals on the crypto exchange, they said.
The company, which was founded in 2017, appeared to be growing, having expanded into regional markets such as Malaysia where it was among the first three digital asset exchange operators to receive full approval from the Securities Commission Malaysia in April 2020.
Last year, it secured an additional US$11.5 million in funding and had plans to expand its team in Singapore to focus on enhancing compliance and operations, according to various media reports.
As recently as Jul 8, roughly one and a half weeks before its shutdown, an email titled “Important regulatory updates from Tokenize Xchange” was sent out to users stating that the platform had secured a licence to operate in Labuan, a federal territory in Malaysia, and was in the “final phase” of obtaining another from the Abu Dhabi Global Market, a financial zone located in Abu Dhabi.
In Singapore as well, it was in “final discussions” with regulators regarding its licensing status, according to the email seen by CNA.
In an earlier statement, MAS said it had rejected Tokenize Xchange’s application for a digital payment token licence on Jul 4. It added that sufficient notice would be given to unsuccessful applicants before a final decision is issued.
It is unclear how many users Tokenize Xchange has. An interview that Hong Qi Yu, a graduate of the Nanyang Technological University, did with online content site Vulcan Post in 2021 cited the chief executive as saying that Tokenize Xchange had “close to 200,000 users globally” then.
But a press release issued by the firm in Mar 2022 said the platform had more than 100,000 customers across Malaysia, Singapore, Thailand and Vietnam.
The collapse of Tokenize Xchange
Jul 20: News broke that Tokenize Xchange will be ceasing operations in Singapore and is putting in place a phased withdrawal process for users. This comes after the Monetary Authority of Singapore’s (MAS) decision not to grant it a licence to offer digital payment token services here.
Emails sent to users showed that users were first notified of the exchange's closure on Jul 17.
Jul 25: MAS said it was monitoring the return of money and assets from Tokenize Xchange to its customers. In its reply to CNA, the regulator also revealed that it rejected Tokenize Xchange's application for a digital payment token license on Jul 4.
Aug 1: AmazingTech, the operator of Tokenize Xchange, and its related companies are being probed by the Commercial Affairs Department for potential offences, including fraudulent trading, the Singapore Police Force and MAS said in a joint statement.
MAS said it had received several customer complaints in mid-July over delays in processing withdrawals of funds and digital payment tokens. Engagements with Tokenize Xchange showed “indications that (the firm) did not have sufficient assets to meet its customers’ claims and that it might not have segregated its customers’ assets from AmazingTech’s assets”.
The regulator also found indications that the firm may have made false representations over the handling of customers' assets when it applied for a major payments institution licence.
MAS then referred the company to the Commercial Affairs Department for investigations, the joint statement said.
Hong Qi Yu, a director of AmazingTech and the founder-CEO of Tokenize Xchange, was charged on Jul 31 with fraudulent trading. The offence carries an imprisonment term of up to seven years, a fine, or both.
Aug 15: A group of seven investors succeeded in getting the High Court to have AmazingTech placed under interim judicial management. Corporate advisory and restructuring firm KordaMentha has been appointed as the interim judicial managers who will take over the running of the company.
The interim judicial managers will have to submit a report on the company’s situation to the High Court by Sep 10.
A hearing for a judicial management application will be held no later than Sep 15.
Collapse Expand
INVESTMENTS IN LIMBO
Tokenize Xchange first notified users of its shutdown in Singapore on Jul 17, alongside a phased withdrawal process.
For example, those with portfolio values under S$10,000 can withdraw or transfer their assets from Jul 17 until Jul 31.
Customers with portfolios between S$10,000 and S$99,999 can do so from Aug 1 until Aug 31, while those whose portfolios are worth S$100,000 or more can withdraw their assets from Sep 1 to Sep 30.
According to the email seen by CNA, Tokenize Xchange said it was “privileged to have served thousands of Singapore users”, and pledged to keep any disruptions due to its operational changes to a minimum.
But to date, users that CNA spoke to have not been able to retrieve their funds. Enquiry emails to Tokenize Xchange have gone unanswered, leaving them in anxiety over the fate of their investments.
One user, Penny, started using the trading platform in end-2021 and had as much as S$18,000 invested in stablecoins, bitcoin and Luna at one point.
The 31-year-old sales executive began trimming her crypto investments during the mass selloffs in 2022 and 2023, following the crash of big players such as US exchange FTX and hedge fund Three Arrows Capital.
At present, her portfolio stands at S$4,000, hence qualifying her as one of those who could initiate withdrawals from Jul 17. But up till now, the status of her withdrawal request remains as “in transit”.
Penny, who declined to provide her full name, said a close friend had recommended her to Tokenize Xchange. Until the news broke last month, she was not aware that the platform was operating on a temporary licence exemption here.
“That’s my oversight. I thought that if a platform could operate for so long in Singapore, it must be safe,” she said.
“I also never had issues when I cashed out over the years, so I never felt that anything was amiss.”
Related:
Mr Tan the retiree said he knew that Tokenize Xchange's licence in Singapore was still pending approval, but he was not too alarmed at the time as several businesses were similarly granted exemptions.
He also attended the initial exchange offering of Tokenize Xchange around end-2018, and thought that the start-up with its local presence had seemed promising.
“With Tokenize Xchange, I felt safe because the founder is from a local university and is based in Singapore,” Mr Tan said. “That gives me some assurance that if anything happens, at least there’s a physical person or office here, versus some of the other crypto exchanges which are offshore.”
On hindsight, Mr Tan said alarm bells did ring for him in end-June when he noticed a sharp plunge in the value of Tokenize Xchange’s own token. TKX, as the token is called and largely used for rewards programmes offered by the crypto exchange, had fallen from a peak of US$47.97 on Jan 4 to around US$24.85 by Jun 30.
By mid-July, TKX's value had further tumbled to around US$6.
Mr Tan wrote to Tokenize Xchange on Jul 17 to express his concerns but received no reply. Out of caution, he sold a small portion of his investments and withdrew about S$500 from his account that evening.
Just after 9pm, users in Singapore would receive the fateful email informing them of the crypto exchange's immediate winding down of operations here.
By then, all trading and withdrawals via the platform had been disabled.
Related:
PREPARED FOR THE WORST
On MAS’ website which carried a list of entities operating under an exemption from holding a licence under the Payment Services (PS) Act, the financial regulator said the exemption applied to those that were carrying out businesses providing regulated payment services prior to the roll-out of the new laws in 2020.
The exemption would end when the licence applications were approved, rejected or withdrawn.
MAS noted that that those operating under the temporary exemption “are neither licensed under the PS Act to provide the specific payment services, nor at any time supervised or regulated by MAS”. This means that customers of these entities are not protected by regulatory safeguards.
Professor Lawrence Loh, director of the Centre for Governance and Sustainability at the National University of Singapore’s business school, said the exemptions came about as the authorities needed to strike a balance and be fair to businesses when new laws are rolled out.
While that may have created a “false sense of security” for some, the nature of the exemptions and its risks were stated publicly.
“Investors must do their homework before ... deciding where to put their money,” said Prof Loh. “Remember, ‘high risks, high return’ do not always mean positive returns. It can be a negative impact too.”
Given the current situation with a police probe ongoing, those affected may want to “wait it out” for a verdict.
“If it is established that there is fraud, they will be able to ride on that verdict and file for damages. But otherwise, they may have to brace for the worst-case scenario that they might not be able to get their investments back,” Prof Loh said.
Some users are already taking things into their hands. Last week, a group of seven users succeeded in getting the High Court to place AmazingTech under interim judicial management.
This means that corporate advisory and restructuring firm KordaMentha has now taken over the running of the company and its assets.
The interim judicial managers said they are now in the process of understanding the firm’s financial and operational situation. As part of stabilising business operations, all deposit withdrawals have been temporarily suspended, according to a document published on KordaMentha’s website.
“As the interim judicial managers continue to evaluate viable options and determine the most effective course of action to protect and secure the company’s assets, no transactions involving Tokenize Exchange will be permitted at this time,” it said.
The High Court has directed the interim judicial managers to submit a report on the company’s situation by Sep 10. A hearing for a judicial management application will be held no later than Sep 15.
File photo of Mr Hong Qi Yu, chief executive officer and founder of Tokenize Xchange.
BR Law’s director P. Sivakumar said having the firm placed under interim judicial management “does not necessarily mean that it is a worst-case scenario for investors”.
He noted that the purpose of doing so is to help “preserve all or part of the business of AmazingTech as a going concern” so that the interest of the company’s creditors are better preserved.
“In other words, the purpose of any judicial management order is to ensure a more advantageous realisation of AmazingTech’s assets than if AmazingTech was wound up,” said Mr Sivakumar.
However, if the application for judicial management is turned down or the judicial management is unsuccessful hence leading to the firm being wound up, the company’s assets “would be distributed pari passu to all unsecured creditors”.
“Depending on the size of the pool of assets available for distribution, the dividend of any creditor may be cents on the dollar,” Mr Sivakumar said.
COPING WITH THE UNCERTAINTY
Amid the uncertainty, many of those affected have turned to each other for support.
Penny, for one, started a group on messaging app Telegram, with the hope of allowing users to share updates and advice as they grapple with questions over what has happened and a likely prolonged wait over the fate of their investments.
“I started this on Jul 18 after I saw the news. I was very lost and I figured there will be others like me,” she said.
For Mr Tan, the past few weeks have been an emotional rollercoaster but he has no intention of letting his family know as he does not want to worry them. As such, he declined to reveal his exact age to CNA.
Looking back, the retiree said through his years of investing, he had tried to be careful. In this case, he had spent thousands of dollars taking up courses and doing his own homework.
But there was one area where he got complacent.
“The biggest take away for me is to always transfer your crypto to an external cold wallet. If it is not in your own wallet and in custody with somebody else, it’s not truly yours.”
“It’s a bit troublesome because you have to transfer out each time, and when you want to sell, you have to transfer back to the exchange. Every time you transfer, you got to pay a fee, so that’s where I got complacent,” he said, with a sigh.
While he continues to monitor the developments, Mr Tan said he does not hold much hope of getting his investments back, which would be a dent to his retirement savings.
“Every day I tell myself, just write it off because if I place too much hope, I don’t know how to pass the day. So, I just take it as it’s gone.”
Continue reading...