• US Attorneys investigated FTX months before it went bankrupt
• Central Bank of Singapore focused on rival Binance
• FTX also without a license – but without consequences
The scandal surrounding the bankrupt crypto trading platform FTX is still keeping the scene in suspense. After balance sheet details of FTX founder Sam Bankman-Fried’s trading firm Alameda Research came to light in early November, revealing that the trading firm is heavily invested in the exchange’s FTT token, Binance CEO Changpeng “CZ” Zhao explained his wanting to sell the remaining units of the digital currency. Shortly thereafter, the competitor announced that it would take over the struggling trading platform, but Zhao backed out of the deal after reviewing the balance sheet and credit. A few days later, FTX filed for bankruptcy in the United States.
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FTX has long been in the focus of the authorities
According to a report by the “Bloomberg” news agency, Bankman-Fried’s crypto exchange was in the focus of the authorities a few months before it went bankrupt. The US Attorney’s Office for the Southern District of New York has already launched a comprehensive investigation into FTX to check compliance with banking secrecy. Specifically, according to the report, the company is based in the Bahamas, but also operates a more restricted trading venue with FTX.US, which it says does not violate the Money Laundering and Terrorist Financing Act. According to Bloomberg, however, the result of the test is unclear.
Central Bank of Singapore puts Binance on warning list
In Singapore, on the other hand, things were different. The central bank of Singapore did not put FTX on a warning list for investors – but its competitor Binance did. The authority has now made a statement in this regard. “Although both Binance and FTX are not licensed here, there is a clear difference between the two: Binance actively solicited users in Singapore, while FTX did not,” reads the release. “Binance even went so far as to offer listings in Singapore dollars and accepted Singapore-specific payment methods like PayNow and PayLah.” Between January and August 2021, complaints were received about the trading platform’s actions. Because Binance recruited users in Singapore without being able to show a corresponding license, the service was quickly put on a watch list to alert investors to the lack of authorization. “The purpose of the Investor Alert List is to warn the public about companies that could be misperceived as being regulated by the Central Bank of Singapore, particularly those that solicit clients in Singapore for financial transactions without the required central bank license,” the body said . “This does not mean it is safe to deal with the thousands of other offshore companies not on the Investor Alert List.”
Binance is largely shutting down Singapore business
The central bank has also asked Binance to stop serving ads to Singaporean users. The company has assured the authority that it has taken measures: the provider is said to have blocked IP addresses from Singapore and removed its smartphone applications from the country’s app stores. As the company itself explained in a press release, the Singapore version of the platform has been unavailable since October 26, 2022. Since then, Singapore users can no longer make fiat deposits, spot trade cryptocurrencies, or purchase cryptocurrencies through fiat purchases or Binance’s “Liquid Swap” system. If customers of the platform still have crypto assets in their account, they must contact customer support.
Allegations do not apply to FTX
However, the allegations that the central bank leveled against Binance did not apply to FTX, the release goes on to say. Although Bankman-Fried’s company, like Binance, was not able to show authorization for the island state, its advertising did not specifically address users from Singapore. “Regarding FTX, there was no evidence that it specifically appealed to users in Singapore. Trades on FTX could not be settled in Singapore dollars either,” the agency said. “But as is the case with thousands of other financial and crypto companies operating overseas, users in Singapore have been able to access FTX services online.” In addition, the central bank clarified that local users of FTX cannot be protected, for example by shielding assets or backing them with reserves. This is not possible because the crypto exchange does not have a license from the central bank and is based abroad. “The main lesson learned from the FTX debacle is that trading cryptocurrencies on any platform is dangerous,” the entity warned. “Crypto exchanges can and do fail.”
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