The Monetary Authority of Singapore (MAS) said on Monday that the central bank was unable to safeguard local consumers from the collapse of FTX since the crypto exchange operated overseas and was not authorized by MAS.
“The first fallacy is that local customers who interacted with FTX might have been protected in some way, either by isolating their funds or making sure that FTX had reserves to back its assets. MAS cannot do this since FTX is not regulated by MAS and operates overseas,” the central bank stated in a statement explaining its position after the collapse of FTX.
“The most essential lesson to be learned from the FTX fiasco is that trading cryptocurrencies on any platform are risky. “Crypto exchanges may and do fail,” said the MAS.
Binance, the biggest cryptocurrency exchange in the world was put on an investor alert list by MAS in September 2021, but FTX was not because Binance “decided to seek” clients in Singapore while FTX did not, according to MAS.
The MAS Investor Alert List highlights unregulated businesses that may have misled the public with the idea that they are MAS-licensed.
Additionally, the central bank stressed that it cannot offer information on all offshore crypto exchanges since there are several such firms.
On November 11, FTX, a crypto exchange based in the Bahamas that was once the second-largest in the world and often a white knight for distressed crypto firms, filed for bankruptcy. That has now had consequences for a number of crypto companies, such as Genesis, BlockFi, and the AAX exchange, and led to the write-off of US$275 million in investment in FTX by Singapore’s state investment firm, Temasek International.
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.