CAD probes Tokenize Xchange operator, director faces fraudulent trading charge as users say their assets remain ‘in transit’

SINGAPORE: The operator of cryptocurrency trading platform Tokenize Xchange, AmazingTech Pte Ltd (ATPL), and its related companies are under investigation by the Commercial Affairs Department (CAD) for potential offences including fraudulent trading, according to a joint statement from the Monetary Authority of Singapore (MAS) and the Singapore Police Force (SPF) on Friday (Aug 1).

Thirty-five-year-old ATPL director Hong Qi Yu was also charged on Thursday (July 31) with fraudulent trading, which carries a jail term of up to seven years, a fine, or both.

The announcement of the investigation followed ATPL’s announcement on July 20 that it is in the process of acquiring a digital financial services (DFS) licence from Malaysia’s Labuan Financial Services Authority (LFSA), after failing to obtain a major payment institution (MPI) licence in Singapore.

On the same day, the company informed users they had until Sep 30 to complete any withdrawals or transfers of assets, as it announced support for its Singapore staff in pursuing new career opportunities by then.

Authorities said that Tokenize Xchange had been operating under an exemption from the Payment Services Act 2019 (PS Act) while MAS reviewed its application for an MPI licence.

The exemption, which applied to entities already conducting activities that came under the Act when it came into force, ended on Jul 4 after MAS rejected its application. Authorities added that the operator is not licensed by MAS, and its activities were not supervised or regulated by MAS.

“Thereafter, ATPL was required to cease providing payment services, wind down its business in an orderly manner, and ensure that all monies and digital payment tokens received from its customers were returned,” MAS and SPF added.

In mid-July, MAS received several complaints against ATPL over delays in processing customer withdrawals of funds and digital payment tokens. MAS told the firm to address these concerns and return all funds and digital payment tokens to customer accounts in an orderly manner, including covering any shortfall in their accounts.

Through its engagements with the company, MAS subsequently found signs that the company did not have enough assets to meet customer claims and that it might have failed to keep customer assets separate from its own.

MAS also found indications that the company might have made false representations regarding the segregation of its customers’ assets when it applied for an MPI licence. The company was then referred to CAD for investigation.

As of two days ago, some users online said on r/singaporefi that their assets remained “in transit,” with one asking, “Has anybody managed to successfully withdraw anything since July 4 till now?” /TISG

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