An industry report is expected to outline best practices in areas like due diligence and risk management.

Singapore’s central bank and police authorities have been helping banks to set uniform standards for fine-tuning their vetting approach when opening crypto accounts, according to a Bloomberg report, citing people with knowledge of the matter.

The project has been ongoing for about six months, the Bloomberg story said. A separate industry report expected to outline best practices in areas like due diligence and risk management, could be published in the next two months, the sources told Bloomberg. The report that focuses on firms that provide payment services would cover stablecoins, NFTs, and gaming credits.

Singapore’s Central Bank, the Monetary Authority of Singapore (MAS), did not immediately respond to CoinDesk’s request for comment.

The MAS told Bloomberg that there are no rules stopping banks operating in the country from doing business with firms handling cryptocurrencies or other forms of digital assets. According to the sources cited by Bloomberg, “even with such guidelines, the banks will decide whether to accept these clients based on their risk appetites.

In the past few week, U.S. authorities have been cracking down on banks that served crypto customers to cut the cryptocurrency industry off from banking services. The collapse of crypto-friendly banks Signature Bank (SBNY), Silicon Valley Bank (SVB), and Silvergate Bank (SI) has lead to crypto companies scrambling to find banking partners and jurisdictions to conduct businesses. In the past, similar “shadow ban” steps have been taken by other jurisdictions, like India.

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The police are reportedly looking into allegations of cheating and fraud by the company and its directors.

Singapore police have started an investigation into troubled crypto exchange Holdnaut, according to multiple reports.
The white collar division of the police force is looking into allegations of cheating and fraud by the company and its directors, according to reports.

The investigation report is the latest blow for the troubled Singapore-based exchange, which was one of the many crypto firms that was hit by the crypto downturn earlier this year.

Earlier this month, the exchange had revealed that it has over SGD 18.3 million ($13.3 million) worth of crypto stuck in the defunct exchange FTX, dealing a further blow to its recovery process.

Holdnaut had frozen withdrawals in August, after reportedly losing close to $189.7 million due to the collapse of the Terra ecosystem.

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The company said it has been in talks with existing lender Bifinity and other potential investors to raise capital, but has not been successful.

Eqonex (EQOS), a Nasdaq-listed crypto financial services firm, filed a voluntary application with the High Court in Singapore to place the company into judicial management.

In a Monday filing with the U.S. Securities and Exchange Commission, Eqonex said its Hong Kong-based entity, Diginex, has been placed into creditors’ voluntary liquidation and Eqonex Capital in Singapore is also expected to enter voluntary liquidation.

The company signed a strategic partnership with Bifinity, a payments technology firm owned by crypto exchange Binance, in March as it began preparing to focus on custody, brokerage and asset management. Bifinity agreed to provide a $36 million loan that could be converted into equity and Jonathan Farnell, former head of U.K. operations at Binance, became CEO. Due to technical breaches of the loan agreement, Bifinity withheld the fifth tranche of the loan.

“In order to address these liquidity issues, the group has been in negotiation with potential investors to obtain equity financing through the issuance of new shares, and in negotiation with Bifinity seeking, amongst other things, a waiver of breaches and an amendment of terms under the loan agreement. Unfortunately, despite the group’s best efforts, these negotiations have not been successful,” the company said.

Other units of the group, including Bletchley Park Asset Management and Digivault, are not in insolvency proceedings. Digivault, a custodian registered with the U.K.’s Financial Conduct Authority, will start a voluntary wind-down and will try to find an alternative solution. Eqonex closed its crypto exchange in August, citing extreme market volatility and declining trading volumes, saying it planned to focus on its asset management and custody.

Judicial management is a type of restructuring in which an independent overseer is appointed to handle a company that cannot meet its debt obligations.

The company’s shares fell almost 24% yesterday, as contagion fears engulfed the crypto market. They have tumbled 91% this year. When Eqonex listed in October 2020 it was the first Nasdaq company with a cryptocurrency exchange.

Ensuring the company was properly regulated at a time that “grow-at-all cost” development characterized the crypto space may have hurt its ability to grow as fast as it wanted, the company said in a letter to shareholders posted on its website.

“We must now acknowledge that we have not delivered on the ambitious goals we set for ourselves as one of the first listed, regulated digital asset ecosystems,” it said.

Neither Eqonex nor Binance respond to requests for comment before publication.

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The head of the Monetary Authority of Singapore, Ravi Menon, insists this stance is “synergistic” and says price speculation is the source of the crypto world’s problems.

Singapore’s central bank wants to promote a digital asset ecosystem, while restricting crypto speculation, said Ravi Menon, managing director of the Monetary Authority of Singapore (MAS).

Menon insisted that this stance is not contradictory during his opening remarks at a Green Shoots Seminar on Monday. Green Shoots sessions are used to introduce new announcements, products and policies to the financial services community.

The MAS, along with other regulators in the country, have been cracking down on the local crypto space with renewed vigor after a number of high profile crypto firms with ties to Singapore – like Three Arrows Capital and Vauld – collapsed earlier this year.

The MAS in particular is looking to strengthen protections for retail crypto investors in the country – something Menon reinforced during his Monday speech.

According to Menon, while the digital asset ecosystem uses blockchain, distributed ledger technology and tokenization to allow “anything of value to be represented in digital form, and to be stored and exchanged on a ledger that keeps an immutable record of all transactions” cryptocurrencies are just “heavily speculated upon” while their prices “have nothing to do with any underlying economic value.”

“Cryptocurrencies have taken a life of their own outside of the distributed ledger and this is the source of the crypto world’s problems,” Menon said.

The MAS is instead focusing on actively promoting the digital asset ecosystem that encompasses the tokenization of financial assets like cash and bonds, real assets like artwork and property, and intangible items like carbon credits and computing resources.

“I hope this presentation has made clear that MAS’ facilitative posture on digital asset activities and restrictive stance on cryptocurrency speculation are not contradictory. It is in fact a synergistic and holistic approach to develop Singapore as an innovative and responsible global digital asset hub,” Menon said.

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The decision will provide Three Arrow’s liquidator, Teneo, the ability to probe assets held in Singapore.

The liquidators of Three Arrows Capital (3AC) secured a crucial court decision in Singapore, which will give them the ability to probe the local assets of the defunct crypto hedge fund, Bloomberg reported citing people familiar with the matter.

The Singapore High Court granted the request of Three Arrows Capital’s appointed liquidator, Teneo, on Monday. This means that the court now legally recognizes the liquidation order originally filed in the British Virgin Islands.

Recognition in Singapore gives Teneo the freedom to request all financial records held locally, this includes bank accounts, cryptocurrencies, stakes in companies and properties, the report said. In July, 3AC co-founder Su Zhu was reportedly looking to sell one of his homes in Singapore worth $35 million.

The fall of the hedge fund was part of a wider crypto contagion that swept across the entire industry. In May, algorithmic stablecoin TerraUSD (UST) collapsed alongside the LUNA ecosystem, 3AC had exposure to the ecosystem and Su Zhu described the episode as “humbling”.

After Terra’s collapse, crypto lenders like Celsius Network and Voyager Digital filed for bankruptcy whilst several firms were forced to halt withdrawals as the liquidity crunch gripped the crypto markets.

Teneo has gained control of at least $40 million of Three Arrow Capital’s assets so far, this represents a small fraction of creditor claims, which are estimated to be at least $2.8 billion, according to a 1,157-page court filing published in July.

The founders of Three Arrows Capital broke their silence shortly after the court filing was released, with Su Zhu and Kyle Davies describing the collapse as /”regrettable.”

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The latest firm to freeze crypto withdrawals is engaged in “proceedings” with Singaporean police.

Singaporean crypto lender Hodlnaut disclosed massive layoffs and pending “police proceedings” in a Friday blog post that underscored the dire financial and legal straits faced by the latest firm to freeze crypto withdrawals.

Hodlnaut said in the blog that it fired 40 people (80% of headcount) and slashed interest rates to 0% APR in an attempt to “stabilize our liquidity” and cut costs. Its founders are “working hard on a recovery plan” and remain in Singapore.

The interest-paying crypto swap shop said it is engaged in “proceedings” with Singaporean authorities. Its blog was mum on the details but characterized the proceedings as in users’ best interest. Hodlnaut froze those users’ assets in early August; it is now seeking protection from its creditors.

Hodlnaut is one of the many crypto firms to stumble under cratering market conditions and imploding companies, alongside Three Arrows Capital, Voyager Digital and Celsius Network. In the blog post, Hodlnaut pointed the finger at “losses suffered” from TerraUSD’s crash.

A Singapore court will hear Hodlnaut’s legal protection plea on Aug. 22, 2022. The court may appoint an interim judicial manager to oversee the company’s financials in place of its current directors.

The post Crypto Lender Hodlnaut Faces Singapore Police ‘Actions’ and Staggering Job Cuts appeared first on Crypto Insider.

Hodlnaut is looking to appoint a judicial manager to avoid liquidating customer assets at a loss.

Cryptocurrency lending platform Hodlnaut has filed an application with the Singapore High Court to be put under judicial management, which is a form of creditor protection.

According to an announcement on Hodlnaut’s website, the application was filed on Aug. 13, five days after the company froze withdrawals. The application will temporarily safeguard the lender from any legal claims.

Hodlnaut is the latest in a long line of crypto companies that have been stung by the recent market downturn, Singapore-based exchange Zipmex received creditor protection on Monday, while trading firm Three Arrows Capital owes billions of dollars to creditors after imploding due to leverage in June.

Hodlnaut hopes that being put under judicial management will allow it to devise a recovery plan to avoid liquidating customer assets.

“We are aiming to avoid a forced liquidation of our assets as it is a suboptimal solution that will require us to sell our users’ cryptocurrencies at these current depressed asset prices,” the statement read.

The entire process is expected to take a “few months” and Hodlnaut will provide a further update on Aug. 19.

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CEO Piyush Gupta said that institutional and accredited crypto clients are the focus for now without entirely ruling out a retail crypto platform

The CEO of Singapore’s DBS Bank said in a recent earnings call that his bank’s focus is on expanding its crypto offerings to accredited and institutional investors and will consider opening up a retail line when regulators and the technology is ready.

During its previous earnings call in February, DBS said that it plans to launch a retail crypto trading desk by the end of 2022. However, in early April it did a complete flip on the plans citing regulatory worries.

CEO Piyush Gupta did not explicitly rule out the retail crypto plan and said that the bank wants to focus on its accredited and institutional offerings in order to mature the technology and scale it.

“We already have a large affluent, accredited investor crypto base that we can scale,” Gupta said during the call. “We won’t do any retail crypto in Singapore this year.” Gupta added that the technology to create a retail exchange is “taking a bit longer than expected.”

DBS’ current crypto offering is open to accredited investors in Singapore, which are defined as those that have SGD 2 million ($1.5 million) in assets.

Gupta said that during the last quarter trading activity “slowed a bit” but volume continues to grow. DBS’ exchange now has almost SGD 1 billion ($724 million) worth of crypto in custody.

Singapore, with its population of 5.6 million, is home to over 526,000 people with a net worth of over $1 million and 4200 people that have a net worth of over $30 million.

While the Monetary Authority of Singapore has created a licensing regime that is considered productive for institutional crypto, it is opposed to retail involvement in the asset class.

“We have taken quite a tough line on unfettered access to retail public because retail investors should not be dabbling in cryptocurrencies. Many global regulators share similar concerns about retail exposure to cryptocurrencies,” Ravi Menon, its Managing Director, said during a recent event.

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The Creators Fund supplements KuCoin’s newly launched NFT marketplace, Windvane.

Singapore-based cryptocurrency trading platform KuCoin announced Tuesday the launch of a $100 million Creators Fund to support early-stage non-fungible token (NFT) projects, according to a press release provided to CoinDesk.

The fund complements the newly launched KuCoin Windvane NFT Marketplace. KuCoin said Windvane offers creators access to the heavy exchange traffic and the support of the community for building initial NFT offerings.

Launched in 2017, the KuCoin exchange reached 10 million registered users at the end of the last year and currently has a daily trading volume of about $2.2 billion, according to CoinGecko data.

KuCoin Creators Fund is a joint venture between Windvane and the exchange’s venture capital arm, KuCoin Ventures. NFT verticals of interest include arts, sports, profile pictures (PFPs), Asian culture, celebrities and GameFi, according to the press release.

The fund will also invite 99 NFT creators to join the Windvane marketplace, which offers standard features like minting, trading and storage. Windvane supports the most popular NFT blockchains, including Ethereum, BSC and Flow.

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Advertising to retail investors will be disallowed, as Singapore limits crypto trading to professional investors.

Local industry associations gave businesses some clarity on Singapore’s rules on advertising crypto services at an in-person meeting yesterday, local newspaper The Straits Times reported.

The Monetary Authority of Singapore (MAS) will disallow marketing and advertising of crypto services to retail consumers in the city-state, the Blockchain Association Singapore (BAS) told members, according to the report. Firms are allowed to advertise to accredited institutional investors if they can demonstrate they are only targeting these groups, BAS said.

Firms can sponsor events that are held outside Singapore but broadcasted there, and can hold in-person events, so long as they are do not include the retail public. B2B advertising, including press releases and announcements that don’t promote trading in crypot, is also allowed.

There are several outstanding issues, such as how businesses can make sure that their advertising doesn’t trivialise the risks of crypto trading, as MAS called for in January. The central bank has also raised the alarm over “training events” that are used to push and sell crypto services to retail customers, according to BAS.

BAS based its recommendations on a March 30 meeting with MAS, at which the Association of Cryptocurrency and Blockchain Enterprises and Start-ups Singapore (Access) and , were also present, according to the report.

The MAS announced it would be limiting crypto advertising in Singapore back in January.

The associations did not provide comment by the time of publication.

Singapore was once seen as a top destination for crypto businesses to set up shop, due to favorable regulation. But it has been outshined by the United Arab Emirates in the last few months, the Financial Times reported, with Binance, FTX, Bybit and Crypto.com setting up shop in the Gulf state.

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