Of the US$8 billion ($10.8 billion) in funds stolen from customers by the now-bankrupt crypto exchange FTX that was laundered into real estate purchases, political donations and other investments, a sizeable amount belongs to Singapore investors.
It was found that investors from Singapore made up the second-largest group on FTX and 5% of web traffic from January to October 2022. Making headlines were stories of punters here losing life savings to the exchange and state investor Temasek Holdings slashing the compensation of the team and senior management involved in making the US$210 million bet gone wrong as a deterrent for making risky crypto bets.
The sentiment towards crypto went south and stayed muted for the whole of 2023’s crypto winter until news that spot Bitcoin ETFs have been approved pushed Bitcoin prices up to an all-time high of above US$70,000.
Still, interest from retail investors has been slow to recover. Not only did the 2022 fallout of FTX remain fresh in their memory, it also reminded them of the painful collapse of Blockfi, Hodlnaut, Celsius and Three Arrows Capital (3AC), all of which had killed their enthusiasm for crypto investing.
“If you’re talking about the crypto natives, there are still ‘degens’ out there. But if you’re talking about common retail, they’re not back yet,” says Sean Tan, head of finance at Headquarters, a crypto accounting firm. Degen is short for “degenerate”, which refers to crypto traders who frequently engage in highly speculative and risky trades.
Tan is part of an informal group of Bitcoin enthusiasts in Singapore that was formed six years ago over several bear and bull crypto cycles. The group, which came together to share ideas and discussions on Bitcoin and its technological use cases, counted some of the most infamous names in the industry such as Su Zhu of 3AC and Juntao Zhu of Holdnaut as members.
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Once a 50-strong community that held monthly meetings, the group is now down to a handful of individuals, including Tan and three other founding members, Isaac Tang, Max Tannahill and Jamie Lim. Ironically, Tannahill says the group was created to weed out scammers and “degens” who wanted to get rich quickly. Instead, since the first day, the four have stuck to discussing the “actual value” of Bitcoin and its ability to allow financial transactions to move freely. However, the plan failed to shield them from the fallouts of the real crypto world.
“I got a little stuck in Hodlnaut,” confesses Tang, an associate director at a boutique public relations firm, who kept a fraction of his profits on the exchange. Hodlnaut previously offered interest rates as high as 12.73% on deposits and eventually suspended customer withdrawals in July 2022 after it suffered US$200 million in losses given its exposure to the collapsed Terra ecosystem.
Despite having Hodlnaut’s founder as part of the Bitcoin group, Tang and the others say that there were no warning signs before its implosion. “Even to the last day, the founder said to the group ‘Everything is fine guys’,” says Tannahill, who works for a Web 3.0 infrastructure provider. Lim says that Hodlnaut’s founder has since been removed from the group.
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Likewise, Tan was an investor in crypto lender Celsius Network in its series A fundraising. He had invested 0.2BTC into the platform, which was worth about US$2,500 back then but has given up thinking about how to recoup his investment.
Meanwhile, Tannahill lost a third of his cryptocurrency holdings during the hacking of crypto exchange Bitfinex in 2016. But to his luck, the exchange refinanced itself and offered Tannahill shares in the company which he later sold for a profit.
“I did well out of that but I learnt never to keep my money on an exchange,” he says. “Don’t give up custody and don’t use exchanges, that has always been the advice of the group.”
All four members are firm believers in “self-custodising”. This means having custody over their own crypto assets or “hold your money, hold your coin” as they believed this was what kept them largely unscathed from the fallouts of the recent scandals.
On the other hand, local retail crypto investors who had not learnt the importance of self-custodising their own digital assets eventually fell to greed, they say.
These investors have high trust in companies, especially those backed by the government, and do not think they could fail, says Tannahill, which was why many had entrusted their assets with FTX.
Still, with Bitcoin prices rising and fuelled by the anticipation that other cryptocurrencies could follow suit, the four believe that retail investment interest will finally return. However, investors may not have learnt their lesson and may act on their greed again.
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Nevertheless, this bull market “feels different”, says Tannahill. “I don’t see any of that activity [from the last bull runs] in the same way this time.”
This time round, Tan believes the crypto resurgence will depend on how establishments bring the cycle back — for example, the industry was introduced to Web 3.0 and non-fungible tokens in the last bull run.
All four investors are sticking by Bitcoin though. “There’s something very compelling about Bitcoin,” admits Lim, who is the operations manager at restaurant 8 Korean BBQ which accepts Bitcoin as a payment method. Lim first chanced upon the digital asset back in 2018 when he was seeking out the “purest form of transacting money” after translation fees from his business ventures began piling up.
“What got me sold was that there was no third party involved,” he says. To encourage adoption, Lim offers customers who pay using Bitcoin a 15% discount on their total bill. But even with the crypto spring emerging, adoption has been slow.
When his restaurant registered the rarity of three lightning payments in a week earlier this year, he learnt it was because a blockchain conference had been in town.
On the other hand, Tannahill simply enjoys the ability to make transactions without permission or identification. He takes the example of spending on something an individual wants to keep private, such as medication or property in another country.
“Or perhaps you are caught in a situation where you have to spend on something that is not [legally] allowed,” offers Tang. One should not be quick to assume that cryptocurrencies are used to cover up nefarious activities or for illegal purposes when all that individual wanted was just privacy, adds Lim.
Ultimately, all four are bullish that Bitcoin is the future of money. They offer explanations around inefficient payment processes, hefty transaction frees and a lack of freedom as key reasons for embracing the coin.
Lim perhaps describes the attraction of Bitcoin best: “The more we learn about it, the more you are convinced that there really isn’t something as well researched and well thought-out as Bitcoin. As cliche as it may sound, Bitcoin is really like a mind virus.”
