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From $10 billion to zero: How a crypto hedge fund collapsed and dragged many investors down with it


Alfrescian (InfP) + Mod
Generous Asset

Singapore set to get tougher on crypto companies
Monetary Authority puts industry on notice about tightening rules


Singapore's central bank on July 19 reported a loss of 4.7 billion Singapore dollars ($3.37 billion) as the strong dollar undermined the value of other currencies in its portfolio. © Reuters DYLAN LOH, Nikkei staff writerJuly 19, 2022 16:24 JST

SINGAPORE -- Singapore is set to get tougher on cryptocurrency companies in the coming months, as the central bank plans to start talking with industry players by September or October with a view to drawing up tighter regulations for the emerging sector.

The Monetary Authority of Singapore's Managing Director Ravi Menon signaled this on Tuesday with the release of the financial regulator's annual report, saying the process of consultation in the coming months will touch on broadening the scope of its rules to cover more activities in the industry.

"So, players who are doing some of these activities but are currently not caught, may well be caught," he told journalists. "When we put out the consult, when we say what are the additional areas that we will regulate, it will capture a wider ambit of players."

Menon noted that cryptocurrency companies with a presence in Singapore have been under strain, naming TerraForm Labs and Three Arrows Capital as outfits that are either not licensed or have not come under the city-state's rules applicable to digital token service providers.

Led by prominent crypto evangelists, the co-founders of Terra, Do Kwon, and Three Arrows' Su Zhu and Kyle Davies, are high-profile casualties of recent plunges in token prices that have set off a crisis in the industry.

Investors and creditors blame them for massive investment losses that appear unrecoverable, with some going as far as to accuse the entrepreneurs of defrauding clients.

Singapore regulates the crypto sector primarily for money laundering and terrorism financing risks, but it has taken a largely hands-off approach when it comes to setting rules on crypto assets as investments. The Monetary Authority has, however, asked crypto companies to stop mass marketing activities and warned repeatedly of the pitfalls of digital tokens as financial assets.

The central bank is set to go further, planning to draw up rules governing retail participation in crypto activities. "We want to take this targeted approach, and that's why we want to explain our overall approach to the industry," Menon said Tuesday. "It's a targeted effort to contain the risk and overexposure of retail investments in cryptocurrencies."

Beyond the crypto sector, Singapore's central bank on Tuesday also reported a loss of 4.7 billion Singapore dollars ($3.37 billion) on its official foreign reserves balance sheet, as the strong dollar undermined the value of other currencies, amid gloomy global conditions that have sparked a rush for safe-haven assets.


Ravi Menon, managing director of the Monetary Authority of Singapore, speaks at a news conference in Singapore on July 19. (Photo by Dylan Loh)

The Monetary Authority logged the rare loss in its investments for the financial year ended March 31, its first decline in about a decade, with its most recent previous loss of SG$10.1 billion booked in 2012.

It held SG$513.8 billion in official foreign reserves (OFR) as of the end of March. The authority said in its report that its investment portfolio is diversified across advanced and emerging market economies, and across different currencies.

While interest income, dividends and realized capital gains helped the central bank book a gain of SG$4 billion, it lost money on its currency conversions equal to a decline of SG$8.7 billion, as the Singapore dollar strengthened significantly against the euro, yen and British pound, the authority highlighted in its report.

"Negative [currency conversion] effects have no impact on us at all. It's because we report our profits in Singapore dollars, that's where you have a translation effect," Menon said on Tuesday. "There are some years when we have embarrassingly large profits -- more than 20 billion dollars -- and a good part of it is because of positive ... translation gain."

The central bank spreads its holdings across a basket of currencies of Singapore's important trading partners, and the net effect of the weakening of a clutch of those currencies, amid a strong dollar, led to the SG$4.7 billion overall loss.

"Investment-grade bonds in the advanced economies form the largest allocation in the portfolio," the financial regulator said in its report. "About three-quarters of the OFR are denominated in U.S. dollars, the euro, Japanese yen and pound sterling, with U.S. dollar forming the bulk."

Despite the greenback forming the bulk of its portfolio, as investors flocked to it as a safe-haven asset amid uncertain global economic conditions, it was not enough to overcome the losses Singapore logged from its holdings of other weakening currencies, said Song Seng Wun, an economist at the private banking arm of Malaysian lender CIMB.

"Central banks around the world will all get similar hits to their reserves, just as the Singapore central bank has, just from translation losses," he told Nikkei Asia, explaining that the recent strengthening of the dollar has only reinforced the devaluation of other currencies.

"This is not structural or mismanagement, this is something almost out of our control," Song added. "So that's the problem of all central banks, which have to deal with the strong U.S. dollar."


This is Just a fucking ponzi scheme. The owner get rich, get his own GCB and all the others got suck into it.