In 2019, George Tan, a retiree, first ventured into cryptocurrency.

At the time, the market was still reeling from the 2018 crash, when Bitcoin had plunged by more than 80% after an extraordinary rise of nearly 2,000 per cent the year before.

Regulators in Singapore had repeatedly warned of the risks and volatility of such trading.

Wanting to proceed with caution, Tan enrolled in several courses on blockchain and crypto mining to better understand the market, according to CNA.

Convinced of the technology’s long-term potential, he began investing in different cryptocurrencies through a dollar cost averaging strategy.

Over time, he put in nearly S$23,000 (around US$17,893), building a portfolio largely consisting of XRP and Bitcoin Cash that has since grown to about S$50,000.

But his gains now appear worthless after Tokenize Xchange, the Singapore based trading platform he used, abruptly ceased operations and came under police investigation.

Trouble began in mid July when Tokenize Xchange announced it would shut down in Singapore after failing to secure a digital payment token license from the Monetary Authority of Singapore (MAS).

The platform had been operating under a temporary exemption.

Matters worsened for Tan on August 1, when authorities confirmed they were investigating AmazingTech, the company behind Tokenize Xchange, for possible offences including fraudulent trading.

MAS said it had found indications of “false representations” made by the firm regarding the segregation of customers’ assets.

On 31 July, Hong Qi Yu, a director of AmazingTech and founder and chief executive of Tokenize Xchange, was charged with fraudulent trading.

“When I saw that news (on August 1), my heart sank,”

said Tan, who is in his 60s.

“This is serious.”

Users told CNA they were blindsided, noting that the exchange had never shown problems with trading or withdrawals.

Founded in 2017, Tokenize Xchange appeared to be expanding steadily, with operations in Malaysia where it was among the first three digital asset exchange operators to secure full approval from the Securities Commission in April 2020.

In 2023, it raised an additional US$11.5 million in funding and was reportedly planning to expand its Singapore team to strengthen compliance and operations.

As recently as 8 July, just over a week before its closure, an email was sent to users under the subject “Important regulatory updates from Tokenize Xchange”.

It claimed the firm had secured a license to operate in Labuan, Malaysia, and was in the “final phase” of obtaining another from the Abu Dhabi Global Market.

The same email stated that discussions with Singapore regulators on its licensing status were also in the final stages.

However, MAS had already rejected its license application on July 4.

While Tokenize Xchange’s user numbers remain unclear, its CEO told Vulcan Post in 2021 that the platform then had “close to 200,000 users globally”.

A company press release in March 2022 stated it had over 100,000 customers across Malaysia, Singapore, Thailand and Vietnam.

Users were notified on 17 July of the closure, alongside a phased withdrawal schedule depending on portfolio size.

Despite these promises, customers interviewed by CNA said they had not been able to retrieve their funds, with emails to the firm going unanswered.

One affected user, Penny, a 31 year old sales executive, began using Tokenize Xchange in late 2021 and at one point had invested S$18,000 in stablecoins, Bitcoin and Luna.

She reduced her exposure after the collapses of FTX and Three Arrows Capital in 2022 and 2023, leaving her with a portfolio of S$4,000, small enough to qualify for early withdrawal.

But her request remains listed as “in transit”.

“That’s my oversight,”

she said.

“I thought that if a platform could operate for so long in Singapore, it must be safe. I also never had issues when I cashed out over the years, so I never felt that anything was amiss.”

Tan said he grew uneasy in late June after noticing a sharp plunge in Tokenize Xchange’s native token, TKX, which had fallen from a peak of US$47.97 in January to US$24.85 by 30 June.

By mid July, it had tumbled to around US$6. He contacted the exchange on 17 July to voice his concerns but received no reply.

Out of caution, he sold a small portion of his holdings and withdrew S$500.

Later that evening, users received the email announcing the exchange’s immediate winding down in Singapore.

Trading and withdrawals were then disabled.

On its website, MAS explained that platforms operating under an exemption from holding a license under the Payment Services Act were never licensed or supervised by MAS.

Customers of these firms were therefore not protected by regulatory safeguards.

Professor Lawrence Loh of the National University of Singapore’s business school said the exemptions were designed to be fair to businesses as new laws were introduced, but they may have created a “false sense of security” for some investors.

“Investors must do their homework before deciding where to put their money,”

he said.

“Remember, ‘high risks, high return’ do not always mean positive returns. It can be a negative impact too.”

Some users have taken legal steps.

A group of seven succeeded last week in getting the High Court to place AmazingTech under interim judicial management, with corporate advisory firm KordaMentha taking over the running of the company.

As part of stabilising operations, all withdrawals have been suspended.

The interim judicial managers are expected to file a report by September 10, ahead of a hearing no later than September 15.

Lawyer P Sivakumar of BR Law said judicial management does not necessarily represent the worst case scenario for investors.

Its purpose is to preserve the business as a going concern and protect creditors’ interests, rather than proceed straight to liquidation.

If judicial management fails and the company is wound up, however, investors may only recover “cents on the dollar”.

Amid the uncertainty, some affected users have turned to one another for support.

Penny started a Telegram group on July 18 for users to share updates and advice.

“I was very lost and I figured there will be others like me,”

she said.

Tan said the past weeks had been an emotional struggle.

He has chosen not to tell his family, as he does not want them to worry.

Looking back, he said he had tried to be cautious, taking courses and doing his own research.

Yet he admitted to one lapse:

“The biggest takeaway for me is to always transfer your crypto to an external cold wallet. If it is not in your own wallet and in custody with somebody else, it’s not truly yours.”

“It’s a bit troublesome because you have to transfer out each time, and when you want to sell, you have to transfer back to the exchange. Every time you transfer, you got to pay a fee, so that’s where I got complacent,” he said.

While he continues to monitor developments, Tan said he does not hold much hope of recovering his investments.

“Every day I tell myself, just write it off because if I place too much hope, I don’t know how to pass the day. So, I just take it as it’s gone.”

Featured image credit: Edited by Fintech News Singapore, based on image by pikisuperstar via Freepik