Singapore Revisits Terraform Labs' Collapse, Clarifies Licensing Irregularities

Singapore has disowned the collapsed
cryptocurrency project Terraform Labs, saying the platform was not performing
activities requiring a license from the MAS and was neither licensed nor exempted
from licensing by the regulator. The city-state has also downplayed the impact
of the Terraform Labs saga on its financial systems.

Responding to a question by a Member of Parliament,
Lawrence Wong, the Deputy Prime Minister and Minister for Finance and Chairman
of the MAS, said that the collapse of Terraform Labs sparked concerns about
regulatory oversight and investor protection in the cryptocurrency market. The
event has prompted Singaporean authorities to reevaluate and reinforce
regulations to mitigate risks in the sector.

Enhancing Regulatory Measures

In response to the incident, the MAS has implemented
several measures to bolster the regulatory framework for cryptocurrency
investment firms operating in Singapore. These measures aim to enhance consumer
protection and mitigate risks associated with cryptocurrency trading.

MAS mentioned: “We also remind those who trade
cryptocurrencies that the MAS’ rules and regulations cannot prevent monetary losses
arising from such activities. Consumers must be aware of the risks of doing so
and understand that cryptocurrencies are highly volatile and have no intrinsic

MAS has introduced new measures focused on
retail consumers, aligning with international standards for regulating
crypto assets. These measures include assessing customer awareness of risks
before granting access to trading, prohibiting incentivized trading offers, and
restricting the provision of credit or leverage to consumers.

Additionally, the MAS has imposed business conduct
requirements on cryptocurrency platforms to ensure proper segregation and
custody of customers’ assets, mitigate conflict of interest, and implement risk management processes. These enhanced measures will be implemented
in phases commencing this year.

Educational Outreach

MAS emphasized the importance of consumer awareness
regarding cryptocurrency trading risks. While regulations can mitigate certain
risks, consumers must understand the volatile nature of cryptocurrencies and
their lack of intrinsic value. Ultimately, investors bear responsibility for
their investment decisions in the crypto market.

Meanwhile, the Securities and Exchange Commission
(SEC) of the United States is seeking $5.3 billion from Terraform Labs and its Co-Founder, Do Kwon. This demand, comprising recovery and civil penalties,
follows a court ruling that found Terraform and Kwon guilty of fraud.

The SEC’s motion, recently filed with the US District
Court for the Southern District of New York, outlined the regulator’s pursuit
of $4.7 billion in disgorgement and prejudgment interest from the bankrupt
Terraform Labs. Additionally, the SEC is seeking civil penalties totaling $520
million, with $420 million directed toward Terraform and $100 million toward

In response, Terraform and Kwon’s legal representatives have proposed significantly lower penalties, suggesting a maximum of $3.5
million for Terraform and $800,000 for Kwon. The court is expected to deliver a
verdict on the motion.

This article was written by Jared Kirui at

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