S$400,000 (est.) – yes you read that right.
Singapore’s only online vigilante group, SMRT Feedback by the Vigilanteh is launching a cryptocurrency index fund on 1st January 2018. The fund named “Currency X” comes with an insurance coverage on the initial investment.
Currency X is understood to be the first investment fund of its kind in Singapore. The first round of investment concluded yesterday (Dec 21).
SMRT Feedback had published a Facebook post on Dec 19, seeking public interest in cryptocurrencies and the possibility of ‘getting in’ on their portfolio:
The group followed up with an official invitation a day later:
According to the fund proposal* obtained by Observer+, the fund is essentially an open-ended mutual fund that invests in a basket of cryptocurrencies selected through ‘pre-defined rules’.
*SMRT Feedback has rejected our request to publish the fund proposal in its entirety.
The rules are:
SMRT Feedback’s former member will lead Currency X
Not much is known about who is behind SMRT Feedback as they have remained anonymous.
Blackwilder is understood to be the corporate arm for SMRT Feedback.
Azly has reserved comment.
Insured principal – a first of its kind
According to the fund proposal, Blackwilder will be insuring all deposits made by potential investors up to a certain cap. The insurance will be from the company’s capital reserves that can be readily liquidated (cash on hand) if the market crash. There will also be a written contract to bind such arrangement.
In addition, all investors will receive back their principal should they wish to redeem it at the end of the maturity period of 6 months. Included in the redemption is a “goodwill bonus incentive of 3% of the principal amount up to S$150, whichever is lower.”
When queried about where the reserves are coming from, SMRT Feedback’s response was, “because we are rich as fuck”.
Bonus points for honesty.
Not all funds will be accepted however. SMRT Feedback said, “Blackwilder has a maximum ceiling as to how much they are willing to draw from reserves for insurance. As such, the investment amount that will be accepted will be relative to this ceiling, dollar for a dollar.”
In return, SMRT Feedback will be taking 50% of profits from all capital gains generated in the first 6 months only. They also said that they do not guarantee returns on investment and lays out the risks that comes with an investment scheme.
Fund not regulated by Monetary Authority of Singapore (MAS)
The fund proposal also declared that it is not regulated by MAS. According to the document, the fund is similar to crowdfunding, a structure that allows the public to provide micro-financing to a business for the purpose of providing a product or service.
According to an interview with Bloomberg, managing director of MAS, Ravi Menon said that there are currently no regulations on cryptocurrencies:
Mr Menon also added that in the case of an Initial Coin Offering (ICO), which is similar to an IPO but for cryptocurrencies, MAS will decide to regulate such a scheme if an ICO resemble securities offerings that include the promise of a dividend or other economic benefits as that would be covered by Singapore’s Securities and Futures Act.
Currency X is in a grey area
Currency X is unique however in that:
1. It is similar in structure to an ICO, but they are not selling tokens.
2. It is similar in structure as an investment scheme, but they are insuring all principal amounts which are guaranteed for redemption at the end of the maturity period regardless of how the market moves.
3. It is run by an anonymous group, backed by a legal entity in Singapore.
4. It is similar to a life insurance but they do not have any upfront premiums to be paid.
Too good to be true but is it a Ponzi scheme?
A Ponzi scheme is an operation of investment that generates return for older investors from the additional capital injected by new investors. Such scheme typically offer short-term returns that are abnormallly high.
When queried, SMRT Feedback said:
“It’s not a Ponzi scheme especially when we don’t guarantee returns and that it is backed by a public individual who will be personally signing off on the contract for the insurance coverage.”
“Also, we will not be accepting the full S$400K; only a maximum ceiling of internal cash reserves that we are willing to burn in case there’s a market downturn. Investors can also withdraw at any time before fund maturity.”
SMRT Feedback has the trust of its people
SMRT Feedback has managed to raise a significant amount in an incredibly short span of time, all while being anonymous.
They made headlines when they took down a big-time scammer, Jover Chew, and almost the whole mall with him, in 2014. The following year, they publicised a crowdfunding initiative that resulted in over S$11,000 raised for an elderly who has been cheated of his money.
SMRT Feedback’s history and antics are no mystery to Singaporeans. Despite Currency X’s grey area, the group’s colourful, blunt character is what led to such huge support for their fund.
An investor who declined to be named said the fund is “incredibly favourable to the man on the street who would like to understand the new economy but not get their wallets burnt”.
Currency X will have their first fund maturity on June 2018.
As of today (Dec 22), registrations for the fund has been closed.