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The Singapore Law Gazette

Digital Tokens and Market Conduct Laws

The crypto world has a reportedly notorious reputation for market manipulation in digital token and cryptocurrency trades. At the same time, there is a rise of security tokens which constitute capital market products. How would market conduct laws and regulations apply to ensure fair and orderly markets of virtual assets? What special considerations would security tokens give rise to in the application of market misconduct offences?

Security Tokens and Market Manipulation

The crypto world has seen a trend towards more issuances of security tokens, which are digital tokens on blockchain representing certain assets and which would be legally characterized as securities or capital markets products (CMP).1See section 2(1) of the Securities and Futures Act (SFA); MAS, A Guide to Digital Token Offerings (26 May 2020): <https://www.mas.gov.sg/regulation/explainers/a-guide-to-digital-token-offerings>. There are now Singapore-based digital exchanges which facilitate the listing or issue of security tokens. For example, 1exchange (1X), a platform operator affiliated to CapBridge which has Singapore Exchange (SGX) as strategic shareholder, received Recognised Market Operator (RMO) status from the Monetary Authority of Singapore (MAS)2< https://www.businesstimes.com.sg/banking-finance/capbridges-1exchange-gets-mas-nod-to-operate-as-one-of-singapores-first-private>. and has listed over S$5.6 million worth of security tokens tradeable private equities representing shares in a fund management company.3<https://www.1x.exchange/press-release-1exchange-singapores-first-licensed-and-regulated-private-securities-exchange-sees-first-ever-private-listing/>; <https://www.1x.exchange/1exchange-welcomes-its-first-cross-border-and-direct-listing-crigen-resources-berhad-operator-of-danai-spa-a-leading-provider-of-wellness-and-aesthetics-services-in-malaysia-successfully-lists-on-si/>. There is also iStox,4<https://istox.com/> and ECXX Global.5ECXX Global was placed in the MAS Sandbox exemption from RMO status < https://www.bloomberg.com/press-releases/2020-08-04/ecxx-secures-rmo-sandbox-approval-from-mas-to-launch-asset-base>; for disclosure, ECXX Global is a client of the author.

This innovative development is welcome because it opens up a potentially liquid global market for private unlisted equity or securities for significantly lower transaction cost given the obviation of third-party clearinghouse reconciliation or settlement, reduction of documentation and professional costs.

On the other hand, market manipulation is reportedly rife in the cryptocurrency and digital token markets.6< https://www.crowdfundinsider.com/2020/08/164839-crypto-markets-are-plagued-with-manipulation-endless-wash-trading-but-industry-execs-are-confident-about-h2-2020-performance-report/>; < https://news.bitcoin.com/cryptocurrency-market-manipulation-is-rife-but-does-anyone-care/>. Two finance professors concluded after a forensic study that a 2017 boom in Bitcoin’s prices was due to a single market manipulator with a large holding trading between Bitcoin and Tether; they noted that this person had an account in, and may even have been assisted by, cryptocurrency exchange Bitfinex, which is owned by the same people who controls Tether.7<https://www.cnbc.com/2019/11/04/study-single-anonymous-market-manipulator-pushed-bitcoin-to-20000.html>. A class-action lawsuit in the United States was filed against the backers of stablecoin Tether alleging manipulation of Bitcoin prices.8< https://www.bloomberg.com/news/articles/2019-10-07/backers-of-crypto-coin-tether-sued-over-market-manipulation>. Wash trading and pump and dump schemes are reportedly common.9< https://finance.yahoo.com/news/real-consequences-cryptocurrency-market-manipulation-090045377.html>; <https://www.financemagnates.com/cryptocurrency/interview/crypto-market-manipulation-is-still-alive-and-well-says-orbs-ilan-sterk/>. Yet, such behaviour is not novel. Far from random, Charles Random de Berenger in 1814 pretended to be Colonel du Bourg and proclaimed from Dover to London that Napoleon I of France had been killed, resulting in the soaring of securities prices on the London Stock Exchange.10< https://www.british-history.ac.uk/old-new-london/vol1/pp473-494>; < https://www.gutenberg.org/files/21027/21027-h/21027-h.htm>.

The United Kingdom (UK) Financial Conduct Authority (FCA) issued a guidance on cryptoassets which sought to address, inter alia, the interface between market abuse and cryptoassets.11< https://www.fca.org.uk/publication/policy/ps19-22.pdf>. The guidance suggests that certain activities involving cryptoassets would be subject to the EU Market Abuse Regulation.12Regulation (EU) No 596/2014 < https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32014R0596&from=EN>.

Applicability of Existing Market Conduct Regulations

Here in Singapore, while there is presently no specific legislation governing crypto or virtual assets market manipulation generally, it is plausible that existing capital markets conduct regulations, e.g. in Part XII of the Securities and Futures Act (Cap. 289) (SFA), would apply to market misconduct dealing in certain types of digital tokens.

What types of digital tokens would be likely caught by existing market conduct regulations? In the first place, it is likely that only digital tokens which are legally characterised as CMP, commonly referred to as “security tokens”, would be caught under the relevant Divisions in Part XII of the SFA.13Sections 196 and 213 of the SFA provide for application to securities, or securities-based derivatives contracts, units in a collective investment scheme, derivatives contracts, spot foreign exchange contracts for purposes of leveraged foreign exchange trading, and any other CMP. These include, in particular, security tokens involving corporations formed or carrying on business in Singapore, and security tokens listed for quotation or quoted on an organised market in Singapore or traded in Singapore.

Because “organised market” is defined in the First Schedule of the SFA to include essentially any place or facility by which offers or invitations to exchange, sell or purchase CMP are regularly made on a centralised basis with the intention or reasonable expectation that it would result in acceptance or making of offers to transact, this means that any security token or dealing in a security token with a Singapore nexus could in theory be caught regardless of whether the security token has been listed on an Approved Exchange (under section 8 of the SFA) or RMO. Likewise, if a digital token should properly be characterised as a CMP and relates to a corporation in Singapore or is traded, even if the token issuer never intended it to be, market conduct regulations would also apply.

On the other hand, it is likely that non-CMP / non-security tokens would not be caught be market conduct regulations. These would include utility tokens and non-CMP cryptocurrency. In which case, caveat emptor should apply. Market players should expect that the market for such tokens will be unruly with little to tame it. Notably, probably one of the first of its kind in the world, the Government of Anguilla passed the Anguilla Utility Token Offering Act which regulates non-security tokens and included market conduct regulations for the same.14<https://www.loc.gov/law/help/cryptoassets/anguilla.php#:~:text=Anguilla%20has%20enacted%20legislation%20to,Commission%20may%20issue%20utility%20tokens>. There may be a case to be made to regulate market abuse in trading of non-security tokens in the same manner as security tokens. After all, there are few asset classes like it which on one hand does not constitute CMP but on the other hand are easily accessible for trading by retail investors on dedicated online exchanges. A closely similar market would be foreign exchange trading, in respect of which leveraged trades are regulated given the high risk to investors. Without regulation of non-CMP tokens, the potential impact of market misconduct on less sophisticated investors may be extensive. This is especially given that there are now also leveraged trading options in the crypto world.

The practical significance of the applicability of the market conduct regulations in Part XII of the SFA is, inter alia, that investigative and enforcement powers,15Generally, section 152 of the SFA. including the full range of possible civil and criminal sanctions, would be availed to the authorities, MAS and the Commercial Affairs Department (CAD) of the Singapore Police Force, against wrongdoers.16MAS, Capital Markets Enforcement (January 2016): <https://www.mas.gov.sg/-/media/MAS/News-and-Publications/Monographs-and-Information-Papers/MAS-Capital-Markets-Enforcement.pdf>. Apart from civil penalties,17Section 232 of the SFA. imprisonment of seven years and/or fines of up to $250,000 are possible punishment for each offence.

The Singapore courts have declared that imprisonment would be seriously considered to deter cynical wrongdoers who would otherwise readily commit offences thinking that they could simply pay a monetary fine and treat it as simply a necessary business expense to be written off.18Public Prosecutor v Wang Ziyi Able (2008) 2 SLR(R) 1082 (HC) at (28)-(29); Ng Geok Eng v Public Prosecutor (2007) 1 SLR(R) 913 (HC) at (77). While broadly the SFA was intended to achieve at least the following aims of protecting investors, protecting public confidence in the market, and ensuring that the operation of the market was not distorted, it is unlikely that the absence of direct contravention of one of those aims would not necessarily have precluded the imposition of custodial sentences.19Public Prosecutor v Ng Sae Kiat and other appeals (2015) 5 SLR 167 (HC) at (58).

The authorities would have all available criminal investigation powers under the Criminal Procedure Code, including, inter alia, the power to arrest and conduct search and seizure, to access, inspect and decrypt the data contained in the computers and devices where computers and electronic devices are seized, and the power to apply for a court order to seize or freeze monies and securities.20Section 324 of the SFA. The authorities also engage in cross-border collaborations with regulators in other jurisdictions to share information and facilitate foreign investigations. The SFA has extraterritorial application to activities conducted in Singapore as well as activities which are conducted outside of Singapore but which have a Singapore nexus.21Sections 196, 213 and 339 of the SFA. So, a person resident outside of Singapore could be liable for market misconduct offences in respect of pump and dump or insider trading activities concerning security tokens traded in a Singapore digital exchange. He can run but he cannot hide.

Market Misconduct Offences and Security Tokens

Some of the relevant market misconduct offences that would likely apply to security tokens are as follows.

False trading and market rigging (section 197 of the SFA): broadly, this is where a person creates a false or misleading appearance as to the volume of trades in the market or attempts to control the market price of CMP through wrongful means. Wash trading—where simultaneous matching orders to buy and sell the same securities are made but where the beneficial owner of the security tokens remains the same22Section 197(3) of the SFA. or there is no transfer of risk—would fall within this offence. Such trades artificially increase trading volumes or maintain prices. The widespread use of algorithmic automated trading bots in crypto exchanges (featured in the landmark case of Quoine Pte Ltd v B2C2 Ltd [2020] SGCA(I) 2) easily facilitates such possible conduct with the coordinated use of multiple trading accounts, unlike say traditional methods of manually doing unauthorised trades on third party accounts.23See e.g. Public Prosecutor v Ng Geok Eng (2006) SGDC 110; Ng Geok Eng v Public Prosecutor (2007) 1 SLR(R) 913 (HC); Public Prosecutor v Chan Lye Huat (2007) SGDC 3; Public Prosecutor v Ng See Kim Kelvin and another (2012) SGDC 141.

Notably, a landmark case on this provision is Tan Chong Koay & Anor v Monetary Authority of Singapore [2011] SGCA 36,24Following comments by the court in this decision, MAS amended the provision to clarify the mens rea requirement to be that a person will be liable if the act is done knowingly or recklessly, or with the purpose of creating a false or misleading appearance: Explanatory Brief: Securities and Futures (Amendment) Bill 2012 and Financial Advisers (Amendment) Bill 2012 <https://www.mas.gov.sg/news/speeches/2012/explanatory-brief>. wherein the apex court held window dressing to be a form of market rigging. There, large orders were placed for the purchase of shares in a company within the last half hour of the last three trading days of the year, resulting in that company’s share prices to increase significantly, and the court found that this was for the purpose of increasing the net asset value of the fund under management. While the actual financial gain of the wrongdoers in that case was negligible, the maximum fine was imposed. Given the rise of crypto hedge funds,25<https://www.investopedia.com/news/rise-crypto-hedge-fund/>; <https://www.ft.com/content/a879e5a0-6d73-453b-a13f-3978c51df294>; <https://www.ft.com/content/5897d40b-ea7f-46fa-b9f6-cf3ace82df60>. it is plausible that large institutions with sufficient asset holding may be tempted to manipulate the market to window dress.

It is common to find in the crypto world, token issuers, either by themselves or by engaging the services of market makers or liquidity providers, buying, selling and/or holding their tokens for the purpose of creating an impression as to the volume of trades or volatility of prices to induce people to buy their tokens. If the tokens are security tokens, it is possible that this conduct could constitute false trading and other market misconduct offences.

Market manipulation (section 198 of the SFA): this is where a person carries out, takes part in, or is concerned in, directly or indirectly, transactions in the securities or securities-based derivatives contracts of a company which have the effect of raising, lowering, maintaining or stabilising the price of securities or securities-based derivatives contracts, with the intention to induce other persons to subscribe, purchase or sell those securities or securities-based derivatives contracts. Pump and dump schemes discussed above would fall under this offence.

False or misleading statements (section 199 of the SFA): this is broadly where a person makes or disseminates false or misleading material information to induce the subscription, sale or purchase, or control market prices, of CMP. This has been applied to cases where company directors or executives overstate profits in their company’s financial statements,26See Public Prosecutor v Tan Hor Peow Victor (2006) SGDC 148; Public Prosecutor v Wong Tai (2006) SGDC 193; Public Prosecutor v Yip Hwai Chong (2006) SGDC 27; Public Prosecutor v Wee Teck Han(2010) SGDC 160; Public Prosecutor v Wee Teck Han MA 137/2010; Public Prosecutor v Alex Ng Soon Heng (2010) SGDC 242. as well as a person posting unconfirmed rumours on an online forum about a CAD raid of a company.27Public Prosecutor v Wang Ziyi Able (2008) 2 SLR(R) 1082 (HC): the court found on the evidence that the accused did not honestly believe in the veracity of his own postings; that the rumour stemmed from one sole source, and the accused’s attempts to verify the information from third parties were far from conscientious and, if anything, entirely futile (at (8)). In the U.S. context, a co-founder of a cryptocurrency firm was convicted for fraudulent claims about the firm and its purported technology and partnerships to induce ICO investors into investing about $25 million to buy their digital tokens (deemed as securities, which is based on the Howey Test28Based on the U.S. Supreme Court decision in Securities and Exchange Commission v. W. J. Howey Co., 328 U.S. 293 which apply the Securities Act of 1933 and the Securities Exchange Act of 1934. ).29< https://www.justice.gov/usao-sdny/pr/co-founder-cryptocurrency-company-pleads-guilty-role-ico-fraud-scheme >.

Fraudulently inducing persons to deal in capital markets products (section 200 of the SFA): essentially where a person communicates false or misleading information or dishonestly conceals material facts or recording or storing false or misleading information in some device to induce another person to deal in CMP. The last clause is particularly relevant to digital tokens given that conceivably, it is probable that a wrongdoer using false information to induce dealing in CMP would do so in a digital form.

Section 201 of the SFA is a blanket catch-all provision which applies to any form of fraud or deception or falsehood or misleading omission in connection with the subscription, purchase or sale of CMP.30Ng Geok Eng v Public Prosecutor (2007) 1 SLR(R) 913 (HC) at (34); Public Prosecutor v Cheong Hock Lai (2004) 3 SLR(R) 203 (HC) at (41). This provision has been used in respect of unauthorised share trading using the securities account of another person,31Monetary Authority of Singapore v Wang Boon Heng & Foo Jee Chin (2016) SGDC 345; Monetary Authority of Singapore v Wang Boon Heng and Foo Jee Chin (2017) SGDC 61; Public Prosecutor v Chan Chwee Leong and Another (2006) SGDC 249; Public Prosecutor v Soligny Bruno Ludovic (2019) SGDC 20; Public Prosecutor v Chui Siew Pun (2009) SGDC 293. a deception on a placement agent and underwriter in an initial public offering (IPO) to obtain placement shares and subsequently breach a moratorium on transfer or disposal of shares,32Public Prosecutor v Ng Hock Ching (2017) SGDC 142; Lee Chee Keet v Public Prosecutor (2016) 4 SLR 1316 (HC); Public Prosecutor v Ng Hock Ching and Lau Voon Kien and Lum Wai Meng Benny (2017) SGDC 142. using nominee accounts to create fake orders for contracts for differences which the accused could accept or reject on behalf of their employer,33Public Prosecutor v Ng Sae Kiat and other appeals (2015) 5 SLR 167 (HC). and market manipulation by entering fake orders to increase bid price and decrease offer price of the underlying securities in respect of contracts of differences.34Public Prosecutor v Tey Thean Yang, Dennis (2017) SGDC 120. The last limb is significant especially if a security token is issued or offered for subscription or purchase without a prospectus, for example in reliance on an exemption,35See e.g. Part XIII, SFA, Division 1, Subdivision 4 and Division 2, Subdivision 4. then the liability provisions for false or misleading statements in a prospectus or profile statement would not apply.36See e.g. section 253 of the SFA. In which case, section 201 could nonetheless apply to any communication made in respect of the subscription, purchase or sale of the security token. This is apart from the offence of token issuers wittingly or unwittingly offering security tokens without a prospectus.37See e.g. sections 240(7) and 296(5) of the SFA; Public Prosecutor v Tay Chee Ming (2020) SGMC 1; Public Prosecutor v Tan Seo Whatt Albert and another appeal (2019) SGHC 156.

Insider trading offences in sections 213 to 221 of the SFA may also be relevant to security token trading. Essentially, this involves trading in a CMP, directly or indirectly, by a person (a connected person or an insider) who is in possession of insider information regarding an corporation, where the person knows or ought reasonably to know that the information is not generally available and if generally available, might have a material effect on the price or value of the CMP.38See e.g. Madhavan Peter v Public Prosecutor (2012) SGHC 153.

It is conceivable that a person involved in the issuance of security tokens or in the corporation in respect of which the security tokens represent some form of investment may indirectly purchase or trade in security tokens using inside information. The challenge of investigation and enforcement is that unlike traditional exchanges or organised markets, the traceability of subsequent token holders may be difficult, depending on how the token exchange restricts such token transfers, whether and how such restriction itself is regulated, and whether the technical aspects of the blockchain and smart contracts permit such transfers, and if so, whether any terms of the transfer can be imposed. One security token exchange for instance states that the tradeable digital securities are non-transferable and non-tradeable outside its platform.

The notion of “information” in this respect is a broad one, need not be factual knowledge of a concrete kind, may include rumours circulating in the market and knowledge of an uncertain, predictive or speculative nature, and is irrespective of the reliability, nature or quality of the information.39Lew Chee Fai Kevin v Monetary Authority of Singapore (2012) 2 SLR 913 (CA) at (29)-(31). What would be interesting given nascent blockchain and smart contract technology deployed in security token trades would be the additional aspect of inside information concerning technical aspects of the tokens. For instance, would trades by a person who happened to come across information about an attempted cybersecurity attack on the security token’s private blockchain suffice to constitute insider trading? It should be noted that there is no requirement of an intention to use the inside information; there is a presumption of knowledge where connected persons are involved.40Lew Chee Fai Kevin v Monetary Authority of Singapore (2012) 2 SLR 913 (CA) at (59)-(60).

On the issue of information generally available, under section 215(c) of the SFA, the test refers to a notion of “persons who commonly invest”. Prior to the 2018 amendment to this provision, the Court of Appeal interpreted the previous version of the provision with reference to the “reasonable investor” defined in Public Prosecutor v Chua Seng Huat [1999] 3 MLJ 305.41Lew Chee Fai Kevin v Monetary Authority of Singapore (2012) 2 SLR 913 (CA) at (80)-(82). MAS amended this provision, departing from the Court’s definition, and issued a Guidance on the amended version of the provision to suggest that there are really different types of ‘Common Investors’ depending on the product in question.42Guidelines on the Interpretation of “Persons who Commonly Invest” in Division 3 of Part XII of the Securities and Futures Act (SFA 12-G01): < https://www.mas.gov.sg/-/media/MAS/Regulations-and-Financial-Stability/Regulations-Guidance-and-Licensing/Securities-Futures-and-Fund-Management/Regulations-Guidance-and-Licensing/Guidelines/Guidelines-on-the-Interpretation-of-Persons-who-Commonly-Invest-in-Div-3.pdf>. It appears that discerning the characteristics of ‘Common Investor’ is not a straightforward one in practice. One wonders whether the ‘Common Investor’ in respect of security tokens is now also assumed to know a thing or two about the security and technical aspects of cryptographic tokens and blockchain given the risks involved in this nascent technology.

Coinbase, a cryptocurrency exchange platform, recently settled a class action lawsuit in which it was alleged to have tipped off its employees ahead of its announcement of full support of Bitcoin Cash (BCH), allegedly allowing the employees to wrongfully profit from artificial inflation of the price of BCH subsequent to the support.43<https://www.coindesk.com/coinbase-hands-nearly-1m-to-cryptsy-victims-after-settling-class-action-lawsuit>; <https://www.investopedia.com/news/coinbase-hit-2-class-action-lawsuits-accused-insider-bitcoin-cash-trading/>. Under existing law in Singapore, it is unlikely that the above insider trading provisions would apply to such a scenario. First, there is the question of whether BCH or the token in question constitutes CMP. Second, there is the issue of whether the information in question concerns a corporation in respect of which the CMP is issued.

Further, it should be considered whether listed security tokens may enjoy price stabilisation exemptions under the Securities and Futures (Market Conduct) (Exemptions) Regulations 2006. Price stabilisation is broadly the process where the market price of a security is manipulated to prevent or slow down a decrease in the price of the security after an issuance or offer. A stabilising manager would buy the securities to stabilise or maintain the price to ensure the success of the issue. If not for an exemption, such conduct would constitute market misconduct.

Security Token Exchanges Regulating Market Misconduct

If a security token is listed on an approved exchange, then section 203 of the SFA imposes an obligation on the token issuer to make continuous disclosure as required under the rules of the approved exchange. Intentional or reckless failure to do so would constitute an offence.

The other side of the coin is that approved exchanges are required to have business or listing rules which prohibit or prevent market misconduct on the exchange, and which facilitate monitoring and enforcement of these rules.44Section 23(1)(a) of the SFA read with Regulation 17 of the Securities and Futures (Organised Markets) Regulations 2018. RMOs must maintain business or listing rules which make satisfactory provision for the organised market to be operated in a fair, orderly and transparent manner and the proper regulation and supervision of its members.45Section 33(1)(e) of the SFA. Security token exchange operators should accordingly use reasonable endeavours to prevent, detect and report market misconduct. These may include extending obligations on intermediaries such as the equivalent of brokers who are trading members of SGX who assist clients to trade CMP.46See SGX Trading Rule 5.12.7; MAS & Singapore Exchange Regulation, Trade Surveillance Practice Guide (August 2019) <https://www.mas.gov.sg/-/media/MAS/News-and-Publications/Monographs-and-Information-Papers/MAS-SGX-Trade-Surveillance-Practice-Guide.pdf>.

Regrettably, many token exchanges in the crypto world are observed to fall short of such a duty. In a Virtual Markets Integrity Initiative Report by the Office of the New York State Attorney General, it was observed that: “Trading Platforms Have Yet to Implement Serious Efforts to Impede Abusive Trading Activity. Though some virtual currency platforms have taken steps to police the fairness of their platforms and safeguard the integrity of their exchange, others have not. Platforms lack robust real-time and historical market surveillance capabilities, like those found in traditional trading venues, to identify and stop suspicious trading patterns. There is no mechanism for analyzing suspicious trading strategies across multiple platforms. Few platforms seriously restrict or even monitor the operation of ‘bots’ or automated algorithmic trading on their venues. Indeed, certain trading platforms deny any responsibility for stopping traders from artificially affecting prices. Those factors, coupled with the concentration of virtual currency in the hands of a relatively small number of major traders, leave the platforms highly susceptible to abuse. Only a small number of platforms have taken meaningful steps to lessen those risks”.47Virtual Markets Integrity Initiative Report” by the Office of the New York State Attorney General, Barbara D. Underwood (18 September 2018): <https://virtualmarkets.ag.ny.gov>.

Yet, artificial intelligence-powered surveillance applications are being developed and can be deployed by token exchanges to monitor and flag out likely market abuse behaviour.48<https://techstartups.com/2019/02/25/solidus-secures-3-million-seed-funding-machine-learning-powered-trade-surveillance-platform/>. The question, of course, is whether exchange operators are willing to invest in such surveillance to uphold the integrity of their markets.

Conclusion

In this burgeoning trend of the issuance of security tokens amidst regulatory liberalisation or sandbox exemptions, consideration has to be given to whether and how the existing regulations on market conduct apply to security tokens, and whether new regulations should be implemented to govern market conduct relating to trading of non-security tokens.

In the meantime, stakeholders in the crypto ecosystem should be mindful about implementing policies, procedures and systems to comply with market conduct regulations to avoid unwittingly participating in activities which attract civil or criminal sanctions.

Endnotes

Endnotes
1See section 2(1) of the Securities and Futures Act (SFA); MAS, A Guide to Digital Token Offerings (26 May 2020): <https://www.mas.gov.sg/regulation/explainers/a-guide-to-digital-token-offerings>.
2< https://www.businesstimes.com.sg/banking-finance/capbridges-1exchange-gets-mas-nod-to-operate-as-one-of-singapores-first-private>.
3<https://www.1x.exchange/press-release-1exchange-singapores-first-licensed-and-regulated-private-securities-exchange-sees-first-ever-private-listing/>; <https://www.1x.exchange/1exchange-welcomes-its-first-cross-border-and-direct-listing-crigen-resources-berhad-operator-of-danai-spa-a-leading-provider-of-wellness-and-aesthetics-services-in-malaysia-successfully-lists-on-si/>.
4<https://istox.com/>
5ECXX Global was placed in the MAS Sandbox exemption from RMO status < https://www.bloomberg.com/press-releases/2020-08-04/ecxx-secures-rmo-sandbox-approval-from-mas-to-launch-asset-base>; for disclosure, ECXX Global is a client of the author.
6< https://www.crowdfundinsider.com/2020/08/164839-crypto-markets-are-plagued-with-manipulation-endless-wash-trading-but-industry-execs-are-confident-about-h2-2020-performance-report/>; < https://news.bitcoin.com/cryptocurrency-market-manipulation-is-rife-but-does-anyone-care/>.
7<https://www.cnbc.com/2019/11/04/study-single-anonymous-market-manipulator-pushed-bitcoin-to-20000.html>.
8< https://www.bloomberg.com/news/articles/2019-10-07/backers-of-crypto-coin-tether-sued-over-market-manipulation>.
9< https://finance.yahoo.com/news/real-consequences-cryptocurrency-market-manipulation-090045377.html>; <https://www.financemagnates.com/cryptocurrency/interview/crypto-market-manipulation-is-still-alive-and-well-says-orbs-ilan-sterk/>.
10< https://www.british-history.ac.uk/old-new-london/vol1/pp473-494>; < https://www.gutenberg.org/files/21027/21027-h/21027-h.htm>.
11< https://www.fca.org.uk/publication/policy/ps19-22.pdf>.
12Regulation (EU) No 596/2014 < https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32014R0596&from=EN>.
13Sections 196 and 213 of the SFA provide for application to securities, or securities-based derivatives contracts, units in a collective investment scheme, derivatives contracts, spot foreign exchange contracts for purposes of leveraged foreign exchange trading, and any other CMP.
14<https://www.loc.gov/law/help/cryptoassets/anguilla.php#:~:text=Anguilla%20has%20enacted%20legislation%20to,Commission%20may%20issue%20utility%20tokens>.
15Generally, section 152 of the SFA.
16MAS, Capital Markets Enforcement (January 2016): <https://www.mas.gov.sg/-/media/MAS/News-and-Publications/Monographs-and-Information-Papers/MAS-Capital-Markets-Enforcement.pdf>.
17Section 232 of the SFA.
18Public Prosecutor v Wang Ziyi Able (2008) 2 SLR(R) 1082 (HC) at (28)-(29); Ng Geok Eng v Public Prosecutor (2007) 1 SLR(R) 913 (HC) at (77).
19Public Prosecutor v Ng Sae Kiat and other appeals (2015) 5 SLR 167 (HC) at (58).
20Section 324 of the SFA.
21Sections 196, 213 and 339 of the SFA.
22Section 197(3) of the SFA.
23See e.g. Public Prosecutor v Ng Geok Eng (2006) SGDC 110; Ng Geok Eng v Public Prosecutor (2007) 1 SLR(R) 913 (HC); Public Prosecutor v Chan Lye Huat (2007) SGDC 3; Public Prosecutor v Ng See Kim Kelvin and another (2012) SGDC 141.
24Following comments by the court in this decision, MAS amended the provision to clarify the mens rea requirement to be that a person will be liable if the act is done knowingly or recklessly, or with the purpose of creating a false or misleading appearance: Explanatory Brief: Securities and Futures (Amendment) Bill 2012 and Financial Advisers (Amendment) Bill 2012 <https://www.mas.gov.sg/news/speeches/2012/explanatory-brief>.
25<https://www.investopedia.com/news/rise-crypto-hedge-fund/>; <https://www.ft.com/content/a879e5a0-6d73-453b-a13f-3978c51df294>; <https://www.ft.com/content/5897d40b-ea7f-46fa-b9f6-cf3ace82df60>.
26See Public Prosecutor v Tan Hor Peow Victor (2006) SGDC 148; Public Prosecutor v Wong Tai (2006) SGDC 193; Public Prosecutor v Yip Hwai Chong (2006) SGDC 27; Public Prosecutor v Wee Teck Han(2010) SGDC 160; Public Prosecutor v Wee Teck Han MA 137/2010; Public Prosecutor v Alex Ng Soon Heng (2010) SGDC 242.
27Public Prosecutor v Wang Ziyi Able (2008) 2 SLR(R) 1082 (HC): the court found on the evidence that the accused did not honestly believe in the veracity of his own postings; that the rumour stemmed from one sole source, and the accused’s attempts to verify the information from third parties were far from conscientious and, if anything, entirely futile (at (8)).
28Based on the U.S. Supreme Court decision in Securities and Exchange Commission v. W. J. Howey Co., 328 U.S. 293 which apply the Securities Act of 1933 and the Securities Exchange Act of 1934.
29< https://www.justice.gov/usao-sdny/pr/co-founder-cryptocurrency-company-pleads-guilty-role-ico-fraud-scheme >.
30Ng Geok Eng v Public Prosecutor (2007) 1 SLR(R) 913 (HC) at (34); Public Prosecutor v Cheong Hock Lai (2004) 3 SLR(R) 203 (HC) at (41).
31Monetary Authority of Singapore v Wang Boon Heng & Foo Jee Chin (2016) SGDC 345; Monetary Authority of Singapore v Wang Boon Heng and Foo Jee Chin (2017) SGDC 61; Public Prosecutor v Chan Chwee Leong and Another (2006) SGDC 249; Public Prosecutor v Soligny Bruno Ludovic (2019) SGDC 20; Public Prosecutor v Chui Siew Pun (2009) SGDC 293.
32Public Prosecutor v Ng Hock Ching (2017) SGDC 142; Lee Chee Keet v Public Prosecutor (2016) 4 SLR 1316 (HC); Public Prosecutor v Ng Hock Ching and Lau Voon Kien and Lum Wai Meng Benny (2017) SGDC 142.
33Public Prosecutor v Ng Sae Kiat and other appeals (2015) 5 SLR 167 (HC).
34Public Prosecutor v Tey Thean Yang, Dennis (2017) SGDC 120.
35See e.g. Part XIII, SFA, Division 1, Subdivision 4 and Division 2, Subdivision 4.
36See e.g. section 253 of the SFA.
37See e.g. sections 240(7) and 296(5) of the SFA; Public Prosecutor v Tay Chee Ming (2020) SGMC 1; Public Prosecutor v Tan Seo Whatt Albert and another appeal (2019) SGHC 156.
38See e.g. Madhavan Peter v Public Prosecutor (2012) SGHC 153.
39Lew Chee Fai Kevin v Monetary Authority of Singapore (2012) 2 SLR 913 (CA) at (29)-(31).
40Lew Chee Fai Kevin v Monetary Authority of Singapore (2012) 2 SLR 913 (CA) at (59)-(60).
41Lew Chee Fai Kevin v Monetary Authority of Singapore (2012) 2 SLR 913 (CA) at (80)-(82).
42Guidelines on the Interpretation of “Persons who Commonly Invest” in Division 3 of Part XII of the Securities and Futures Act (SFA 12-G01): < https://www.mas.gov.sg/-/media/MAS/Regulations-and-Financial-Stability/Regulations-Guidance-and-Licensing/Securities-Futures-and-Fund-Management/Regulations-Guidance-and-Licensing/Guidelines/Guidelines-on-the-Interpretation-of-Persons-who-Commonly-Invest-in-Div-3.pdf>.
43<https://www.coindesk.com/coinbase-hands-nearly-1m-to-cryptsy-victims-after-settling-class-action-lawsuit>; <https://www.investopedia.com/news/coinbase-hit-2-class-action-lawsuits-accused-insider-bitcoin-cash-trading/>.
44Section 23(1)(a) of the SFA read with Regulation 17 of the Securities and Futures (Organised Markets) Regulations 2018.
45Section 33(1)(e) of the SFA.
46See SGX Trading Rule 5.12.7; MAS & Singapore Exchange Regulation, Trade Surveillance Practice Guide (August 2019) <https://www.mas.gov.sg/-/media/MAS/News-and-Publications/Monographs-and-Information-Papers/MAS-SGX-Trade-Surveillance-Practice-Guide.pdf>.
47Virtual Markets Integrity Initiative Report” by the Office of the New York State Attorney General, Barbara D. Underwood (18 September 2018): <https://virtualmarkets.ag.ny.gov>.
48<https://techstartups.com/2019/02/25/solidus-secures-3-million-seed-funding-machine-learning-powered-trade-surveillance-platform/>.

Ronald JJ Wong
Director
Covenant Chambers LLC
E-mail: [email protected]

Ronald JJ Wong engages in both disputes and corporate practices, specialising in technology, intellectual property, corporate finance, financial regulations, and employment.