CRYPTO exchange Binance was placed on Singapore’s Investor Alert List (IAL) and investigated by the Commercial Affairs Department, after the Monetary Authority of Singapore (MAS) received several complaints about the exchange between January and August 2021, MAS said in a statement on Monday (Nov 21).
MAS was responding to “questions and misconceptions that have arisen in the wake of the FTX.com debacle”, the regulator said in its statement. In a matter of days early in November, billions in crypto investors’ funds were lost as FTX collapsed after a crippling liquidity crunch rendered the exchange insolvent. Singapore accounted for about 5 per cent of online traffic to FTX.com last month, according to data analytics platform SimilarWeb, coming fourth after Japan, Korea and Germany.
While reiterating that both Binance and FTX were not licensed here, MAS said Binance had been actively soliciting users in Singapore, offering listings in Singapore dollars, and accepted Singapore-specific payment modes such as PayNow and PayLah.
This was found to be a “possible contravention” of the Payment Services Act (PS Act), hence prompting the regulator to list Binance on its alert list in September 2021. On MAS’s referral, the CAD commenced investigation into Binance for possible contravention of the PS Act.
The IAL serves to warn the public of entities that may be wrongly perceived as being MAS-regulated, especially those which solicit Singapore customers for financial business without the requisite MAS licence, MAS said. This does not mean that entities not listed on the IAL are safe to deal with, the agency said.
MAS required Binance to stop soliciting Singapore users, and subsequently, Binance put in place various measures including geo-blocking of Singapore IP addresses and removing its mobile application from Singapore app stores.
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FTX, on the other hand, was not placed on the alert list as there was no evidence of the company soliciting users in Singapore and it did not offer trades in Singapore dollars.
However, Singapore users were still able to access online FTX services. The regulator said it was not possible to ringfence the assets that Singapore investors choose to put up with FTX, nor ensure that the company backed its assets with reserves. “MAS cannot do this as FTX is not licensed by MAS and operates offshore,” the regulator said.
MAS would also not have been able to protect investors’ assets even if they had parked them under Quoine, the operator of the Liquid exchange in Singapore. The subsidiary, like all of FTX’s overseas units, has been included in the US bankruptcy proceedings and has halted withdrawals.
Quoine was only acquired as part of the Liquid group acquisition by FTX in March 2022.
As to whether MAS should exhaustively list on the IAL and provide information on all offshore crypto exchanges in the world, the regulator said this was not possible due to the sheer volume of such entities.
“There are hundreds of such exchanges, and thousands of other entities offshore that accept investments in non-crypto assets. It is not possible to list all of them and no regulator in the world has done so,” MAS said.
MAS also clarified that Binance was not “banned” from operating in Singapore, and the group was able to continue carrying out other unregulated activities in Singapore, such as corporate functions and blockchain technology services. Binance Asia Services had continued to provide services to Singapore users as an exempt payment service provider while its application for a PS Act licence was being reviewed by MAS.
Binance Asia Services subsequently withdrew its licence application but continues to carry out unregulated activities in Singapore, MAS noted.
The regulator warned that dealing in any cryptocurrency, on any platform, is hazardous.
“Crypto exchanges can and do fail. Even if a crypto exchange is licensed in Singapore, it would be currently only regulated to address money-laundering risks, not to protect investors,” MAS said.
Further, investors may still lose money even if they invest with a well-managed exchange, as “cryptocurrencies themselves are highly volatile and many of them have lost all value”.
“As MAS has repeatedly stated, there is no protection for customers who deal in cryptocurrencies. They can lose all their money,” said MAS.
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