Security issues aside I don't think it's unreasonable for the Singaporean police to examine the source of the funds in this case.

The buyer was purchasing about 35 BTC which is unusual.  It is even more unusual to purchase the BTC using cash in a hotel room. 

Usually this type of Over the Counter (OTC) transaction would pay using a wire transfer and some sort of escrow service to make sure each side holds up their part of the arrangement. 

Singapore is a major financial center which has a higher usage of crypto than in the West so I'm sure the police were wondering why this 'business transaction' was processed in this manner.