Asia Express

Hong Kong lays out welcome mat for exchanges, Korean crypto lender contagion, Do Kwon banged up abroad, Bank of China’s Ethereum debt note.

Hong Kong lays out the red carpet for crypto exchanges

While some jurisdictions (cough: America) have adopted a regulation-by-enforcement approach toward crypto, others are doing the opposite. According to a June 15 report from The Financial Times, the Hong Kong Monetary Authority is pressuring major financial institutions to accept crypto clients. But it’s not just regulators laying down a red carpet to boost the special administrative region’s (SAR’s) Web3 industry. In one instance, Johnny Ng Kit-Chong, Member of the Legislative Council of Hong Kong, wrote on June 10:

“There have been a lot of news about international virtual asset exchanges in the past two days. I send forth an invitation to welcome global virtual asset exchanges, including @coinbase, to come to Hong Kong, apply for a compliant exchange, and negotiate a listing plan. I am willing to provide assistance!”

Similarly, Joseph Chan Ho Lim, Hong Kong’s Under Secretary for Financial Services and the Treasury, revealed in an interview that The Hong Kong Monetary Authority has conducted public consultations on the launch of stablecoins and is in the process of establishing a regulatory framework by the end of the year.  “Hong Kong will continue to support the development of the industry in the future and welcomes the industry and talents to come to the SAR,” the politician said.

On Jun. 1, Hong Kong Securities Regulatory Commission issued regulations stipulating the requirements for cryptocurrency exchanges to apply for a license to operate in Hong Kong. For regulated trading platforms, a license application must be submitted to the Securities Regulatory Commission within nine months, or before Feb. 29, 2024. If not, their business in Hong Kong must be terminated before May 31, 2024.

Bank of China mints debt notes on Ethereum

On Jun. 12, BOCI, the investment banking subsidiary of Bank of China, revealed the tokenization of 200 million Chinese Yuan ($28 million) in digitally structured notes on the Ethereum blockchain. The move is reportedly the first act of a Chinese financial institution tokenizing a security in Hong Kong. The notes are governed by both Hong Kong and Swiss law as per their origination by the Swiss investment bank UBS. Ying Wang, deputy CEO at BOCI, commented: 

“Working together with UBS, we are driving the simplification of digital asset markets and products, for customers in Asia Pacific through the development of blockchain-based digital structured products. We are encouraged by the evolution of Hong Kong’s digital economy and are committed to promoting the digital transformation.”

Previously, UBS had issued a $50 million tokenized fixed-rate note in Dec. 2022. Meanwhile, the government of Hong Kong issued an 800 million Hong Kong dollar ($100 million) tokenized green bond on Feb. 16, 2023, underwritten by four banks and priced with a yield of 4.05% per annum. 

Do Kwon: In and out of jail

On June 15, The High Court of Montenegro in Podgorica ordered Terraform Labs CEO Do Kwon and CFO Han Chang Joon back to jail pending extradition proceedings to South Korea for charges relating to their role in the $40 billion collapse of the Terra Luna ecosystem.

Earlier this month, Kwon and Joon were released on 400,000 euros bail each in their ongoing passport fraud case after a Montenegrin Basic Court dismissed an appeal by prosecutors.

Their brief period out on bail was not a happy time either. During their respite from prison, South Korean prosecutors announced they would apply to freeze Kwon and associates’ $13 million held in Swiss bank accounts. A new hearing on charges of falsifying documents is scheduled for June 16 in the same Basic Court.

According to local sources, Kwon and Joon will be detained for a period of six months as the court decides on their extradition case. Kwon and Joon also face extradition to the U.S. on 11 charges relating to fraud, breach of trust, and embezzlement.

And if that wasn’t enough, there is yet another legal proceeding against Kwon. On June 16, Kwon will be questioned by the Special State Prosecutor’s Office for a letter he sent from detention to government officials, disclosing his connections with the leader of the Europe Now Movement (PES), Milojko Spaji.

According to the country’s National Security Council, Kwon and Spaji have been friends for five years, and last met in Belgrade in Dec. 2022. Investigators claim there is evidence of financing the PES campaign from Kwon’s laptop. If convicted, Kwon not only faces further jail time in Montenegro but could also serve up to 40 years in a South Korean prison, and even more jail time potentially awaits in the U.S.

Korean blockchain firms daisy chain contangion

On June 14, South Korean yield platform Haru Invest filed a criminal complaint against its consignment operator B&S Holdings, alleging “fraudulently provided management reports containing false information.”

Haru had paused deposits and withdrawals the day before, stating, “We have discovered through our internal inspection process that certain information provided by a consignment operator was suspected to be false.” Previously, concerned investors took pictures of allegedly empty corporate offices and accused the firm of orchestrating a “rug pull,” which Haru says is inaccurate.

The move immediately affected South Korean Bitcoin lending firm Delio, which quickly announced the temporary suspension of customer withdrawals “in order to safely protect the assets of customers currently in custody,” citing issues at Haru Invest. Delio is one of the largest of such entities in South Korea, holding an estimated $1 billion in Bitcoin, $200 million in Ether, and $8.1 billion in altcoins. 

A curious commentary regarding the matter came from Jun Du, the co-founder of cryptocurrency exchange Huobi Global, who wrote:

“With the detonation of Delio, the thundering of [crypto] lending platforms is basically over.”

However, Du warned that contagion related to centralized trading platforms, which started with FTX, is just the beginning. “Not only the newcomers are confused, but also the OGs in the industry. When will the thundering of the black box of centralized crypto entities end?” the former blockchain executive asked, while also expressing his doubts on whether the industry will witness a “slump” or be “ushered into a new bull market” after such issues are resolved. 

Last year, Huobi co-founders Jun Du and Leon Li reportedly sold 100% of their stake in the exchange to an entity controlled by Chinese blockchain personality and Tron founder Justin Sun. The latter claims that the exchange is now profitable after a period of reorganization, which by the way, included crushing an employee revolt. 

Subscribe

The most engaging reads in blockchain. Delivered once a week.

Email address

SUBSCRIBE

Hong Kong needs 100K crypto people STAT, AliExpress’ NFT drop censored, Binance humiliated on China TV, AI unicorn grows in 100 days.

Alibaba NFTs censored?

On June 8, AliExpress, the online retail subsidiary of Chinese tech conglomerate Alibaba, announced that it had joined forces with Web3 developer The Moment3! to create a series of NFTs based on shopping themes.

The upcoming collection will feature 5,555 NFTs and is scheduled to debut on June 25, 2023. Less than one day after the announcement was made, AliExpress’ tweet was deleted. Nevertheless, AliExpress’ dev partner, posted a statement confirming the drop.

While no reason has been provided for why AliExpress deleted its original announcement, Chinese authorities have been cracking down on anything crypto-related and forcing firms to remove keywords related to “nonfungible tokens” from their products.

In April, Bitcoin price quotes were added to Douyin, which is the Chinese version of TikTok with over 1 billion users, for less than 48 hours before it was removed by authorities. Cryptocurrencies-fiat transactions, mining, and exchanges (but not outright ownership) are currently banned in China.

Binance humiliated on Chinese TV

If there is anything that the U.S. and China, the world’s two largest competing superpowers, have in common, it is their mutual hatred for cryptocurrency exchanges. On June 6, one day after the U.S. Securities and Exchange Commission sued Binance over allegations of operating an unlicensed exchange and selling unregistered securities in the U.S., Chinese Central Television (CCTV) reported on the lawsuit for its one billion viewers. Curiously, the CCTV broadcast also acknowledged for the first time that Binance is the world’s “largest cryptocurrency exchange.”

Previously, CCTV broadcast a program about new cryptocurrency exchange rules in China’s special administrative region of Hong Kong that took effect on June 1. The segment was notable for not having anything particularly negative to say about crypto in a country where it is currently banned, which is probably why it’s believed that authorities took down the segment just one day later. Given Chinese authorities’ contempt for crypto exchanges such as the likes of Binance, it is likely that this report will stay up for good.

Hong Kong needs 50K-100K Web3 professionals

In a June 7 fireside chat between local news outlet Chaincatcher and Johnny Ng Kit-Chong, a member of the Legislative Council of Hong Kong, Ng said that the SAR would need at least 50,000 to 100,000 Web3 positions to be filled in the next few years based on conservative estimates.

During the interview, Ng revealed that Hong Kong’s plans to incubate 1,000 Web3 firms in three years have already exceeded expectations, with more than 400 firms registering at the time of publication, four months since its launch. Speaking with regard to Hong Kong’s new crypto rules, Ng said:

“So, in fact, Hong Kong’s policies are relatively open. If you plan to make a game and issue a Token, there is no problem in Hong Kong. The key is whether the form of token sale involves securities or futures’ components, and this part will be regulated. In fact, Hong Kong’s supervision has always existed and is relatively clear, with almost no gray areas.”

Ng first became an investor in the Web3 space in 2010. He came in contact with Satoshi Nakamoto’s Bitcoin white paper seven years later and “completely understood blockchain’s functions and its core values” shortly thereafter. Ng became a member of the Legislative Council of Hong Kong in January 2022 and has since pushed for pro-Web3 regulations in the SAR.

Do Kwon vs. the world

When a man is having a hard time, it’s usually not cool to punch down. However, for law enforcement officials across multiple jurisdictions, as well as hundreds of thousands of investors/victims of last year’s $40 billion Terra Luna collapse, the last thing they probably want to see is for Terraform Labs co-founder Do Kwon to get back on his feet again.

Earlier this week, Kwon scored a minor victory in his ongoing passport fraud case in Montenegro after an appeals process by prosecutors was dismissed by a Montenegrin court, setting himself and former Terraform Labs CFO Han Chang-Joon back out on 400,000 euros bail each once again. But before the two had time to celebrate, South Korean prosecutors announced that they would apply to freeze Kwon and associates’ $13 million held in Swiss Bank accounts.

Around the same time, a scandal broke out in Montenegro relating to Kwon’s alleged connections to the Balkan nation’s former minister of finance, Milojko Spaji. According to local news outlet Balkan Insight, Kwon sent a hand-written letter to Montenegro’s incumbent prime minister, Dritan Abazovi, claiming that he had financed the “Europe Now” opposition party movement led by Spaji. The move came just days before Montenegro’s scheduled parliamentary elections on June 11.

Anyways, Kwon’s troubles in Montenegro are just the beginning. The blockchain executive faces criminal proceedings from both U.S. and South Korean authorities for his role in the Terra Luna implosion and could serve 40 years if convicted, in South Korea alone, before extradition to the United States.

Chinese AI startup reaches unicorn status in less than 100 days

On June 5, Huiwen Wang, co-founder of Chinese food delivery giant Meituan Dianping, raised $230 million at a $1 billion valuation for his AI startup Guangnian Zhiwai, or “Lightyears Away.” The round was led by notable Chinese venture capital firm along with Chinese internet conglomerate Tencent. According to media reports, Lightyears Away seeks to become the OpenAI of China, mirroring the success of its American counterpart.

If anything, the raise taught us that ambition and reputation triumph all. The firm achieved its unicorn status just 100 days after its debut and does not appear to have a minimum variable product. In its last update before the fundraising announcement on May 5, the firm is still seeking core front-end and back-end developers and interns.

Subscribe

The most engaging reads in blockchain. Delivered once a week.

Email address

SUBSCRIBE

Chinese RMB stablecoin issuer’s Shanghai office reportedly deserted after police raid, and WeChat offers Bitcoin prices — but for how long?

RMB stablecoin team allegedly arrested

On May 31, local news outlet PANewsLab reported that the developers for the offshore Chinese RMB and Hong Kong dollar stablecoin issuer CNHC had allegedly lost contact or had been taken away by law enforcement officials. A photo shows what appears to be an empty office building at CNHC’s Shanghai division with the following message posted:

“The building’s assets have been seized by law enforcement; vandalism is prohibited.”

In March, CNHC raised $10 million in its Series A, led by KuCoin Ventures, Circle, and IDG Capital. The team said back then that it planned to use the funds for “expansion in the Asia Pacific Region” and was in the process of moving its headquarters from the Cayman Islands to Hong Kong.

The reported move appears to be part of a wider crackdown on cryptocurrencies by Chinese authorities. On May 24, Asia Express reported that tokens of Singaporean inter-blockchain communications protocol Multichain had plunged 30% on a delayed backend upgrade and rumors of Chinese police arrest of its core developers.

Though Multichain says that it is still operational, it stated on June 1 that it is still “unable to contact CEO Zhaojun and obtain the necessary server access for maintenance,” and as a result, the protocol will need to suspend a number of affected cross-chain services.

In the past two days, the Multichain protocol has experienced multiple issues due to unforeseeable circumstances. The team has done everything possible to maintain the protocol running, but we are currently unable to contact CEO Zhaojun and obtain the necessary server access for

— Multichain (Previously Anyswap) (@MultichainOrg) May 31, 2023

Hong Kong opens up retail crypto licensing

Despite censorship and bans on the Mainland, the adoption of cryptocurrency exchange regulation in Hong Kong proceeded as scheduled. On May 31, the Hong Kong Virtual Asset Consortium was formed to approve the top 30 cryptocurrencies by market cap for listing and to conduct quarterly reviews of registered digital asset exchanges to ensure compliance with licensing regulations that took effect on June 1.

On another front, according to a research report published by multichain wallet provider BitKeep, notable crypto projects such as Avalanche, Conflux, EOS, and Fantom have all joined Hong Kong’s Web3Hub ecosystem fund unveiled in April. With a budget of $10 million, the fund will incentivize Web3 projects to set up subsidiaries or headquarters in the special administrative region of China (SAR). The fund is headed by Paul Chan Mo-Po, financial secretary of Hong Kong SAR.

Despite the growing traction, BitKeep researchers reminded that HK regulations remain strict for the time being:

The new regulations clearly limit the types of tokens that can be traded and the types of services that exchanges can provide. Cryptocurrencies must meet the Securities and Futures Commission (SFC) strict regulations, which emphasize that only non-security tokens can be traded, have a history of at least 12 months, and the token has been included in two cryptocurrency indices.

In addition, exchanges are prohibited from providing wealth management products, as well as the provision of lending and deposit services, along with derivative transactions such as perpetual crypto contracts. “However, the regulator recognizes the importance of derivatives trading in the encrypted market and will conduct further research and consideration,” researchers noted.

WeChat allows BTC price quotes

As of June 1, WeChat, China’s largest social media app with over 1 billion users, has indexed Bitcoin price quotes in its search queries. The move is significant, considering that China has pretty much banned all crypto-related activities such as exchanges, crypto mining, and fiat-crypto on-ramping since 2021.

However, if history is any guide, the WeChat Bitcoin search query probably won’t last for long. Formerly, billion-user platforms China Central Television and Chinese TikTok variant Douyin have allowed something similar, only to have authorities pull them down just days after launch.

All Nippon Airways launches NFT marketplace

On May 30, All Nippon Airways (ANA), the largest airline in Japan with over $12.2 billion in revenue in the last fiscal year, launched its aeronautical-themed NFT marketplace dubbed “ANA GranWhale” Developers wrote:

“NFTs have been used mainly in fields such as art and music as a technology for expressing ownership of digital assets. This time, the ANA Group will apply NFT to the aviation industry.”

As its inaugural step, ANA GranWhale will debut aerial photographer Luke Ozawa’s first-ever digital photo in his career as an NFT with an asking price of 100,000 Yen. The second installment, starting on June 7, will feature a 3-D model NFT conversion of the first special paint Boeing 787 aircraft launched by ANA. The NFT marketplace’s development began last August as part of ANA’s vision of building a Web3 virtual travel platform.

“With a view to commercializing NFTs as specialty products from various parts of Japan, we aim to improve the value of customer experience, including local and overseas, through the ‘GranWhale NFT marketplace.'”

Fed inspires Astar Network to revamp tokenomics

On May 28, Sota Watanabe, the founder of Japanese blockchain Astar (ASTR) Network, expressed his desire to revamp the protocol’s tokenomics, saying that even the U.S. government was targeting an inflation rate of 2%, compared to levels of around 8.4% currently. Drawing further inspiration from the Federal Reserve, Watanabe proposed mirroring the Fed’s meeting decisions every quarter or every six months and updating the blockchain’s token inflation rate on a variety of factors, writing:

“Decentralizing one of the roles of the FED can be a challenge but also an interesting trial.”

The crypto executive said he wished to either fix ASTR’s total supply and make the inflation rate smaller and smaller such as in Bitcoin, or automatically decide the inflation rate based on network usage, as in Ethereum, or use a mix of both models.

A multichain decentralized application proposal, Astar recently launched the second iteration of its smart contracts supporting both Ethereum Virtual Machine (EVM) WebAssembly Virtual Machine (WASM VM) on its mainnet for developing new cross-chain apps.

bitFlyer and the Travel Rule

According to a recent announcement, Japanese cryptocurrency exchange bitFlyer will comply with the country’s Financial Services Agency’s new Travel Rule starting June 1. The Travel Rule states that a crypto asset exchange operator sending crypto assets at the request of a user shall provide specific information about the sender and the recipient to the exchange operator receiving the transfer.

In addition, further restrictions are imposed on crypto transfers to any of the 21 countries, such as Japan, Switzerland, Canada, Bahamas, Hong Kong, and the U.S., utilizing the Coinbase-led Travel Rule Universal Solution Technology (TRUST).

bitFlyer clients who wish to transfer crypto to any of the 21 TRUST countries can only send Bitcoin or Ethereum and select ERC-20 tokens. Such requirements do not apply to transfers to addresses identified with any of the remaining non-TRUST countries. As told by bitFlyer:

“The purpose of the travel rule is to prevent the ability for terrorists and other criminals from using digital fund transfer systems as well as track unauthorized use.”

Subscribe

The most engaging reads in blockchain. Delivered once a week.

Email address

SUBSCRIBE

Mastercard and Visa join Hong Kong’s CBDC pilot, new installment in Justin Sun’s Huobi soap opera, and a GameFi token pumps on no news.

Hong Kong partners with 16 companies to build CBDCs

On May 18, the Hong Kong Monetary Authority (HKMA) announced the launch of the cyber Hong Kong dollar pilot project. According to officials, 16 companies from the financial payment and technology sectors will conduct the first round of trials this year on the feasibility of a Hong Kong dollar central bank digital currency (e-HKD). Companies included in the pilot include Alibaba Groups Alipay Financial, Mastercard Asia, Ripple Labs, Visa and HSBC.

The digital Hong Kong dollar will start off with six potential use cases; comprehensive payments, programmable payments, offline payments, tokenized deposits, Web3 transaction settlements and tokenized asset settlements. The CBDC is scheduled for a three-stage approach, with the novel pilot program being an important aspect of the second stage.

However, the HKMA has not yet decided whether to officially launch the CBDC. It expects to share the results of the trials at Hong Kong Fintech Week 2023 in Q4. HKMA CEO Yue Wai-man commented:

“Although the HKMA has not decided whether or when the CBDC will be launched, we are pleased to launch the Cyber Hong Kong Dollar Pilot Scheme. This is a good opportunity for the HKMA to join hands with the industry to explore innovative use cases and prepare for the possible launch of the CBDC in the future”

Back in October 2021, Mastercard said that it would be preparing its payment infrastructure for integration with CBDCs. Likewise, Visa believes that stablecoins and CBDCs will play meaningful roles in payments and has an ongoing blockchain interoperability project related to the matter.

Bitgets comfy run in Q1

According to its first quarter update published on May 17, cryptocurrency exchange Bitget reached $59 billion and $658 billion in spot and futures traded, respectively, representing growth rates of 8% and 27% from Q4 2022. In other metrics, the book value of the exchanges Protection Fund surged to $380 million from $300 million during the same period, aided by a bullish rally in the price of major cryptocurrencies.

The exchange says that its proof-of-reserves increased from 223% on December 20, 2022, to 246% on April 3, 2023, as it completed listings for 105 coins, bringing the total to over 500 listings. The exchanges native token, BGB, rallied by 120% during the quarter, to $0.47 at the time of publication.

Biget is committing $10 million over five years in a novel Blockchain4Youth initiative to offer blockchain courses and certifications through Bitget Academy and will host campus lectures in partnership with universities worldwide. In April, the exchange received its regulatory license in Lithuania, allowing it to provide crypto services both in and from the Baltic nation.

Huobis latest drama

On May 16, Justin Sun, the founder of Tron blockchain and relatively new de-facto owner of cryptocurrency exchange Huobi Global, published a series of allegations against Wei Li, the brother of Huobi Global co-founder Leon Li. In his statement, Sun accused Wei Li of receiving millions of Huobi (HT) tokens through abnormal means at zero cost and of consistently selling off these HT tokens and cashing out.”

“We plan to engage with Li Wei to negotiate a refund and arrange for the destruction of his remaining HT tokens. This action is not only a matter of justice but also serves the best interests of everyone in the HT DAO community.”

Sun claims that Li Wei has not made any substantial contributions to our community.” and would therefore seek disgorgement of any profits related to Wei Lis sale of the tokens and send them to a null address for a token burn. In response, Wei’s brother Leon Li wrote:

“I hope Huobi can provide evidence. If it is confirmed that it is zero-cost HT was obtained through illegal means, I will personally pay 10 times the HT [amount] to Huobi company.”

Leon Li followed up by saying, “I hope that Huobi will return the users legal assets,” if the allegations are found to be false. In October 2022, Leon Li and fellow co-founder Du Jun reportedly sold 100% of the exchanges stake to an investment firm controlled by Justin Sun. Since changing owners, the exchange has seen its fair share of woes, although Sun claims that Huobi has returned to profit and things have settled. If youre curious, this wasnt the first abnormal action surrounding the Huobi token either…

No news is good news as GameFi token surges over 300%

On May 17, the token of NFT multiplayer online battle arena game Superpower Squad (SQUAD) surged by over 300% to a high of $0.017 apiece within a single day before its pullback. No material news was associated with the development, and the tokens price has mostly been on a losing streak since March.

Superpower Squads developers tell Asia Express it has two game modes in development. The first is a Zombie Crisis survival mode where the top surviving players would receive NFT props (items used to kill enemies) upon round completion. In the second game mode, players would receive unique buffs (temporary powers) depending on the clan composition of NFT heroes, with each clan requiring one NFT hero of legendary rarity.

The devs stating things are still moving comes after community speculation that the game had ceased development as the price of SQUAD dropped on also seemingly no news. The game previously surpassed 100,000 downloads in January.

Superpower Squad is by no means the first blockchain project to have high price variance for no particular reason. On April 14, shares of Singaporean Bitcoin (BTC) mining operator SAI.TECH surged by over 360% in one day to a high of $7.42 before giving back much of its gains. Like Superpower Squad, SAI.TECH had no material announcements either before or after the wild price action.

Subscribe

The most engaging reads in blockchain. Delivered once a week.

Email address

SUBSCRIBE

IRS wants $38B in unpaid taxes from Alameda, Milady token surges 3,000%, restraining order for Arthur Hayes over 3AC “threatening” words.

IRS wants $38 billion tax from Alameda

According to recent flings posted by the claims agent of bankrupt cryptocurrency exchange FTX, the U.S. Internal Revenue Service (IRS), is claiming a total of $44 billion from the exchange’s bankruptcy and related firms, including $38 billion against its sister quantitative trading firm Alameda Research. In one single claim, the IRS assessed $20.4 billion in unpaid partnership and payroll taxes against Alameda Research LLC.

Founded in Sept. 2017 by Sam Bankman-Fried and Tara Mac Aulay, with Caroline Ellison serving as CEO, Alameda was headquartered in Hong Kong and conducted up to $5 billion worth of trades per day at its peak. Hong Kong does not levy taxes on capital gains. However, being U.S. nationals, its founders and key executives are obligated to pay taxes on their worldwide income irrespective of where they reside and how many days they actually spend in the U.S. each year, as per the highly unusual U.S. taxation by citizenship regimen.

The partnership taxes assessed by the IRS suggests it believes the entity operated on a partnership regime, where, unlike corporations, profits are not taxed at the entity level but are instead “passed through” to its partners and subsequently taxed at the individual level.

If the IRS prevails, it could mean bad news for the creditors. According to the filing, the IRS is claiming the total unpaid taxes of $44 billion from FTX and related companies under Admin Priority. The IRS claims would take precedence over that of unsecured creditors, such as FTX’s one million users, during bankruptcy proceedings. Despite their best efforts, bankruptcy trustees and law firms have only managed to locate $7.3 billion in assets from FTX and related entities.

Milady NFTs and token frenzy

On May 8, seeing the traction surrounding meme tokens, a group of self-organized developers created the Milady (LADYS) token on Ethereum (ETH), basing their design on the popular anime nonfungible tokens (NFT) collection of the same name. The token has no association with Milady Mixer nor Charlotte Fang, the creators of the Milady collection.

Developers stated that “94% of the tokens were sent to the liquidity pool (LP). LP tokens were burnt, and the contract is renounced,” while the remaining 1% airdropped to Milady NFT holders and 5% reserved in multisig wallets for future milestones. In addition, developers warned: 

“$LADYS is a meme coin with no intrinsic value or expectation of financial return. There is no formal team or roadmap. The coin is completely useless and for entertainment purposes only.”

However, it appears that investors thought otherwise. At the time of publication, each LADYS token is worth $0.0000001285 apiece, an increase of 3,254% in one day’s time. On May 10, American business magnate Elon Musk tweeted a meme containing the image of a Milady NFT, causing the collection’s average sale price to spike:

On May 11, Asia-Pacific focused exchanges such as Gate.io Bybit, Bitget, MEXC Global, and Huobi all began listing the meme token. At the time of publication, LADYS’ market cap has surpassed $100 million, with $245 million in volume traded within the past 24 hours.

Do Kwon’s prospects: Bad to worse

Last May, Terraform Labs’ co-founder Do Kwon was a bourgeoning South-Korean billionaire at the helm of the $40 billion Terra Luna and TerraUSD dual-token ecosystem. One year later, Kwon is behind bars in the Baltic nation of Montenegro, awaiting trial on charges of falsifying documents. Luna, his life’s work, now sits in the ruins, while Kwon faces extradition on fraud charges from both South Korean and U.S. prosecutors related to the collapse of Terra Luna, on top of his Montenegrin legal woes. 

Kwon’s actions have truly upset a lot of people. The disgraced South Korean entrepreneur faced yet another setback on May 10, when South Korea Chief Judge Yun Chan-Young froze 233.3 billion Korean won ($176 million) worth of Kwon’s personal assets.

The prohibition extends to the sales of Do Kwon’s Galleria Foret apartment complex in Seoul, a novel officetel, and a series of imported cars. The order also bans the disposition of Kwon’s financial assets, such as securities, bank deposits and cryptocurrency stored in personal accounts on virtual currency exchanges. Multiple criminal proceedings across jurisdictions against Kwon are currently ongoing.

Meanwhile his attorneys have proposed he be let out on bail at 400,000 Euros or $437,000, which the court is yet to decide on.

3AC co-founder scores victory

Once upon a time, a wise Chinese sage said something to the effect of, “If you can’t solve a problem, then the least you can do is to solve the person who raised it.” 

On May 5, Singaporean judge Sandra Looi Ai Lin of the Protection from Harassment Court issued a restraining order against BitMEX co-founder Arthur Hayes. The judgment came at the request of attornies representing co-founder Su Zhu of Three Arrows Capital (3AC), a Singaporean hedge fund undergoing bankruptcy proceedings with total claims of $3.5 billion. Among other items, the restraining order prohibits Hayes, under the penalty of fines and or imprisonment by Singaporean authorities, of:

“By any means, using any threatening, abusive or insulting words or behaviour, or making any threatening, abusive or insulting communication, that would cause the Applicant [Su Zhu] harassment, alarm or distress.”

Hayes is one of 3AC’s many creditors, with an alleged personal claim of $6 million. But unlike his colleagues, who prefer to stick with official British Virgin Island bankruptcy court communications in reclaiming funds (to mixed results), Hayes regularly calls out the 3AC co-founders’ behavior on Twitter, writing in one instance, “be warned. I want my fucking money,” in response to a purported Bahrain sovereign wealth fundraise by Zhu and his colleague Kyle Davies.

Despite their financial woes it appears that Zhu and Davies have largely bounced back from the unpleasant experience. Nowadays, Davies frequently boasts his culinary skills on social media while Zhu shares his take on world philosophy as it ties into 3AC’s downfall.

Subscribe

The most engaging reads in blockchain. Delivered once a week.

Email address

SUBSCRIBE

CZ calls out Justin Sun for farming SUI at the expense of the little guys, “useless” PEPE up 20x, new 3AC venture in hot water in Dubai.

Our weekly roundup of news from East Asia curates the industrys most important developments.

SUI rises to glory as Sun sets sights on it

On Apr. 30, cryptocurrency exchange Binance unveiled two LaunchPools for the then-up-and-coming listing of Sui tokens. As a Layer-1 blockchain created by Mysten Labs, which in turn was founded by former Meta executives, the Sui project was eagerly anticipated and raised $300 million from venture capitalists such as FTX Ventures, Coinbase Ventures, Jump Crypto, a16z, and Circle Ventures. On Binance, users could either stake BNB or TrueUSD (TUSD) to farm a share of 40 million Sui tokens.

To say that the LaunchPools were oversubscribed is an understatement. Despite having just 0.4% of 10 billion Sui up for grabs, the retail frenzy saw the BNB-Sui farm pool surpass 8.895 million BNB staked and the TUSD-Sui farm pool top 892.6 million TUSD staked, totaling a combined $3.8 billion at the time of publication.

The thirst for Sui was so great that on May 1, Changpeng Zhao (CZ), co-founder and CEO of Binance, publicly rebuked Tron Founder Justin Sun for a deposit of 56.1 million TUSD on the exchange.

“Our team told Justin, if he uses any of these to grab the LaunchPool Sui token, we will ‘take action against it’. SMH. Binance LaunchPool are meant as air drops for our retail users, not just for a few whales,” CZ wrote.

Interestingly, it appears as if the publicity has raised questions over the extent of Sun’s involvement in TUSD. On May 4, TrueUSD developers stated that “TrueUSD was never owned by Justin Sun” in response to allegations.

Anyways, Sun quickly apologized with regards to the deposit, claiming that the funds were intended for “market making,” but nevertheless, “some of our team members were not fully aware of the intended purpose for these funds,” and used them to “participate in exchange campaigns.” The blockchain personality wrote that the Tron DAO has contacted Binance and “arranged for a full refund.” The same day, 278,752 SUI in farmed rewards were returned to the TUSD LaunchPool.

Three days after the Binance LaunchPool event, the Sui token was listed after its mainnet finally came online, with network transactions averaging a rate of five per second. The relatively low utility metric has not stopped Sui from having a fully diluted market capitalization of $13.65 billion, and that’s despite a 70% plunge from its opening price in a matter of hours, according to CoinMarketCap. At the time of publication, each Sui was worth $1.36 apiece, representing a 1,260% gain from its offering price of 0.1 USDT last month.

All the wild trading was apparently too much for some exchanges to handle. On May 4, Mingxing Xu, founder of OKX, issued anapologyto customers who “cant cancel order” and purchased Sui at a higher price than intended.

“We are so sorry for the inconvenience and will fix the trading system bug asap to prevent it happening again in the future.”

Even the Sui team seemed concerned about the rampant levels of speculation, as they reportedly asked “cooperative exchanges” not to launch Sui perpetual contracts. Some ignored the request and immediately listed them anyway. The same day, Sui developers also launched the Sui Token Bridge, which connects 22 blockchains to Sui through Wormhole.

APAC exchanges love PEPE

On May 1, meme cryptocurrency PEPE surged by over 60% in a single day after cryptocurrency exchange OKX announced the listing of PEPE tokens. OKX staff wrote in the announcement the underlying cartoon character, Pepe the Frog, that “this is one of the most popular memes in the world.” Well, they weren’t going to highlight the use cases, with Pepe’s own website calling it “completely useless.”

OKX isn’t the only exchange active in the Asia Pacific (APAC) region with a liking for PEPE. Around the week starting Apr. 17, cryptocurrency exchanges, including BingX, Huobi, Gate.io, MEXC Global, and Bitget, all listed PEPE within days of one another. The move sparked a major bull run that saw the token return over 2,000% since then to trade at $0.00000133 apiece at the time of publication.

Despite its popularity, it’s unclear if PEPE has any association with Matt Furie, the cartoonist who created Pepe the Frog (seems unlikely however). The token’s creators have remained anonymous. It appears that investors don’t seem to mind at all, as PEPE’s total market cap has since surpassed $550 million. If you want to support Furie’s work, you can pick up a genuine Pepe NFT for under $30.

3AC founders’ philosophy is a pearl

Recently, Dubai’s Virtual Assets Regulatory Authority published a written reprimand of the OPNX Exchange, which was created by Singaporean hedge fund Three Arrows Capital’s (3AC) co-founders Kyle Davies and Su Zhu. In the letter, regulators warned that OPNX was operating in the Emirate of Dubai on an “unregulated basis,” and marketing and advertising the exchange as well as its native FLEX token “without the necessary permits.”

“Following the launch, and with the continued lack of satisfactory remedial action by the responsible parties, VARA is continuing to actively monitor the situation and investigate OPNX’s activity to assess further corrective measures that may be required to protect the market.”

Last June, the Monetary Authority of Singapore reprimanded 3AC for exceeding its $188 million cap on assets under management and allegedly providing false information to investors. The defunct hedge fund owed approximately $3.5 billion to creditors when it filed for bankruptcy at approximately the same time.

But just like with 3AC, it appears that resolving regulatory scrutiny is neither a key priority for Davies nor Zhu. Shortly after the announcement, Davies, who now works as a professional chef, divulged his appetite for oysters whilst explaining their spiritual relationship to entrepreneurship in terms of Hellenistic and Classic Chinese philosophy. “They are a potent reminder of the power of turning harsh conditions into something beautiful.” Aw, shucks.

Meanwhile, Zhu, who is also a philosophy enthusiast, seems to have followed the Buddhist school by explaining to his audience the “nonduality” of political ideologies such as communism and capitalism.

3AC creditor and BitMex co-founder Arthur Hayes, discovered an even deeper meaning behind the two’s messages. He pointed out that there were exactly six oysters on Davies’ dinner plate, and theorized that each oyster symbolized one piece of his $6 million claim from 3AC’s bankruptcy proceedings. Court procedures are currently ongoing.

Huawei unveils latest in wave of Chinese ChatGPT rivals, Alibaba’s multichain bridge, Hong Kong crypto exchange regulations imminent.

Our weekly roundup of news from East Asia curates the industrys most important developments.

Hong Kong inching close on a clear crypto regulatory pathway

A few months after prominent industry players lamented the lack of registration pathways for cryptocurrency exchanges in Hong Kong, some respite may finally be on the horizon. On Apr. 27, Julia Leung, chief executive officer of the Securities and Futures Commission (SFC) of Hong Kong, revealed that regulation of virtual asset trading platforms (VATP) remains one of the commission’s key priorities, stating:

“The SFC has received more than 150 responses to the consultation on the proposed regulatory requirements for licensed VATP operators and will issue the conclusions and final guidelines in May before the new regime takes effect on Jun. 1 2023.”

Leung also said that Web3 and blockchain technology will bring “enormous benefits to the financial industry in terms of efficiency” and reiterated the commission’s support for “underlying distributed ledger technology and responsible innovation in relation.” Nevertheless, the SFC also issued the following warning: 

“The regulator takes firm and prompt enforcement action, against market manipulation activities, social media ramp and dump schemes, abusive behavior in listings, intermediary misconduct and virtual-asset-related misconduct. The amended Anti-Money Laundering Ordinance (AMLO) will give the SFC new power to combat these scams.”

In February, the SFC stirred up a crypto frenzy when it launched a consultation on its proposed regulatory requirements for digital asset trading platforms. On Apr. 20, a report published by the Hong Kong Stock Exchange daily trading volume of all Hong Kong crypto ETFs averaged about $1.19 million between December 2022 and early February.

Alibaba takes an interest in multichain

On Apr. 26, Ant Financial, an affiliate of Chinese e-commerce conglomerate Alibaba, announced during its annual Digital Technologies Developer Conference that it would officially open source its cross-chain protocol AntChain Bridge to developers worldwide.

The AntChain Bridge was designed based on the Institute of Electrical and Electronics Engineers (IEEE) Standard for Blockchain Interoperability, one of the first standardized communications protocols in this category.Yan Ying, technical director of AntChain, said that cross-chain technology “is essential to unlocking the full potential of Web3” and would allow for “large-scale transferring of digital assets.”

During a live demonstration, AntChain Bridge developers several commemorative NFTs to different blockchains. Developers can access its cross-chain systems or business smart contracts by downloading the cross-chain plug-in on the AntChain Openlab Github repository page. Two months prior, the National Basketball Association’s (NBA) Chinese subsidiary announced that it would expand its partnership with Ant Financial to mint more NFTs on its native AntChain. The blockchain was launched in 2017 with a focus on fintech. 

Huawei and the GPT craze

On Apr. 27, local news outlet IThome reported that Chinese telecommunications conglomerate Huawei has filed for a national trademark application labeled “Huawei NetGPT” under the classification “scientific instruments.” Earlier this month, Huawei developers shared further insight into its other ChatGPT clone, “PanguGPT,” claiming that:

“It has entered the field of intelligent document search, intelligent enterprise resource planning, and has implemented scenarios such as enterprise financial anomaly detection, large-scale models in Arabic, etc.”

Similar to Huawei, Chinese tech giant Baidu unveiled its answer to ChatGPT, Ernie Bot, on Mar. 16. One month later, Alibaba also began testing its ChatGPT rival dubbed “Tongyi Qianwen.” Around the same day, American business magnate Elon Musk also revealed that he would create his own ChatGPT equivalent, TruthGPT, for seemingly political reasons. Chat-based large language models can have major applications in blockchain, such as auditing smart contract code orguiding its audience on crypto trading.

Chinese city public servants to receive digital yuan salaries

Earlier this week, government officials from the City of Changshu (population 1.56 million) announced that the city’s public servants would be paid in digital yuan (e-CNY) effective starting next month.

The move follows a successful pilot test beginning last October that saw select public officials receive public transport reimbursements through the digital yuan. While means of spending the e-CNY directly are currently somewhat limited on a national level, the City of Changshu has begun allowing e-CNY payments for utility bills, cell phone bills, cable TV, and public transportation.

WeChat, too, expands digital yuan adoption

On Apr. 26, Chinese social media app WeChat, which boasts over 1 billion monthly active users, expanded digital yuan adoption to its video content creation platform and “Mini Programs” platform for vendors.

According to local reports, services payable on WeChat via e-CNY now include ride-sharing, online shopping, or ordering takeaway from restaurants. To use the feature, users must first pass through know-your-customer checks. Despite its increased presence, e-CNY accounted for just 0.13% of the total Chinese Yuan in circulation at the beginning of the year.

3AC’s Kyle Davies becomes a connoisseur of white poultry, meanwhile SAI.TECH’s stock more than doubles on no news as Bruce Lee NFTs flunk.

Our weekly roundup of news from East Asia curates the industrys most important developments.

Three Arrows Capital (3AC), a once bourgeoning Singaporean hedge fund worth an estimated $10 billion at is peak, was utterly obliterated by the bear market last year. However, the carnival it has created since the initial blowup still lives on, and its main characters appear to be doing quite well, too.

One of 3AC co-founders, Kyle Davies, appears to have finally found some solace from the experience. After much turmoil, the former hedge fund manager has now transitioned into an aspiring restauranteur fixated on one task perfecting the art of cooking chicken.

Any seasoned chef would know that cooking a tender, well-seasoned, juicy, and crispy-skinned chicken is a rather exquisite skill. To perfect it, one needs to maintain a razor-sharp focus on the meat while techniques are applied, which requires cutting out distractions such as focusing on negative feelings related to creditors trying to claim $3.5 billion from 3AC’s bankruptcy during the performance.

Generally speaking, chefs don’t like customers who are rude. Which is why when a user suggested on Apr. 14 to review-bomb Davies’ new Dubai restaurant, the now professional cook immediately threatened legal action against individuals who post “intentionally false reviews and defamation against my restaurant.”

Meanwhile Davies and fellow cofounder Su Zhu launched the OPNX exchange on April 5, launched to trade bankruptcy claims of fallen crypto entities such as FTX and Celsius. Although daily volume was only around $13 initially, by the time of publication, the exchange has reached nearly $1.8 million in daily trading volume.

It’s not pleasant being the one to disappoint the crowd, but these numbers are pretty impressive. Consider the fact that the sum of all regulated crypto products listed in Hong Kong only do about $1.19 million in volume per day.

Not that the exchange is playing up its 3AC ties. In an Apr. 14 interview with OPNX’s CEO Leslie Lamb, the blockchain executive reportedly said that “While Su Zhu and Kyle contributed much in terms of early-stage ideas and vision, they currently are no longer involved in OPNX’s everyday operations.”

In other 3AC news, on Apr. 19, Sotheby’s auction house announced it will sell a series of NFT collections recovered by liquidators, including Dmitri Cherniaks artwork “The Golden Goose” purchased by Davies and Zhu with $5.8 million in Ether in August 2021.

Zhu appears to have taken the new philosophically, quoting the famed English poet Alfred Tennyson: “[Tis] better to have loved and lost than to have never loved at all,” while highlighting the NFT auction for his followers. 3AC’s bankruptcy proceedings are currently ongoing.

Singaporean Bitcoin miner’s wild week

On Apr. 14, shares of Singaporean Bitcoin (BTC) mining operator SAI.TECH listed on the NASDAQ exchange surged by over 360% in one day to a high of $7.42 apiece before giving back much of its gains. The stock is currently trading at $3.68 per share at the time of publication. There was no material news preceding the unusual price action and we certainly tried to identify some.

SAI.TECH develops Bitcoin mining infrastructure hardware, namely Saihub, Tankbox, and Rackbox, that utilizes liquid cooling and waste heat recovery solutions to improve efficiency for miners.

On Apr. 20, the company consolidated its product lines into three categories; Ultiaas, Boltbit, and Heatnuc. Boltbit will focus on providing decentralized transaction system services and technical support, while Heatnuc focuses on the “research and promotion of small modular reactors.” Ultiaas puts the emphasis on hardware and software products that convert mining chip heat to reusable energy.

The company terminated its Phase II 90 megawatts (MW) crypto mining and hosting expansion plan in Kazakhstan last year following a “force majeure,” and will continue to execute its Phase I 15 MW agreement for the same purpose. In January 2022, the Kazakh government resigned following protests and shut down access to the internet, disrupting the operations of Bitcoin miners in the country. The company is currently emphasizing operations at its testing and distribution facility in Ohio.

Bruce Lee NFTs fizzle…

Not even the late Hong Kong film legend could defeat the economic laws of supply and demand with his martial arts dexterity. Between Apr. 12 to Apr. 14, the Bruce Lee Foundation, directed by his daughter Shannon, partnered with NFT video platform Shibuya to The House of Lee collection celebrate the life and work of the namesake Kung Fu legend. A total of 48,691 NFTs were minted at a price of 0.008 Ether (ETH) each with 6,452 owners (13% unique).

There was one slight issue, only one NFT was unique in the collection, that of the House of Lee Genesis NFT. With an abundance of supply, the floor price of the collection quickly dropped to around 0.003 ETH apiece on OpenSea at the time of publication. The sale still grossed approximately $730,000, minus the cost of placing a mega billboard advertisement for the NFT drop on Broadway.

While the initial sale may have been somewhat lukewarm, the NFTs are billed as Your ticket to the House of Lee, and there are reports that this is a mere first stage of an ongoing Web 3.0 collaboration. It seems the martial arts legend may continue to fight on in the realm of blockchain after all.

Bitcoin’s day of glory on Chinese TikTok, 30M crypto fans still in China, Justin Sun’s subpoena after dream rendezvous with Web3 socialite.

Our weekly roundup of news from East Asia curates the industrys most important developments.

Bitcoin’s day of glory on Chinese TikTok

On Apr. 10, Douyin, the version of Tiktok exclusive to Chinese users, began publishing price quotes related to Bitcoin (BTC) and other cryptocurrencies such as Ethereum (ETH), Dogecoin (DOGE), and Ripple (XRP). The move sparked rampant speculation among the Chinese media and users alike related to a potential change of policy by the country’s central government on cryptocurrency regulation.

Unlike its Western counterpart, content on Douyin is heavily monitored and sometimes censored by Chinese authorities. Since Sept. 2022, Douyin has been cracking down on content relating to cryptocurrencies, NFTs, and Metaverse.

Hence, many individuals were genuinely surprised to see cryptocurrencies discoverable on the government-curated platform. For around 24-hours, any of Douyin’s estimated 730 million mainland Chinese users could freely view crypto price quotes on the app. However, dreams of a relaxation in the country’s strict crypto laws were crushed shortly thereafter. On Apr. 11, Bitcoin and cryptocurrencies price quotes were removed from Douyin, with a message stating:

“Based on relevant national regulations, unofficial digital currencies do not possess the same legal standing as fiat currencies. Please invest cautiously.”

Since 2021, China has banned all forms of crypto exchanges, crypto-fiat transactions brokered by financial institutions, and initial coin offerings. That said, the country stopped short of banning the ownership of cryptocurrencies altogether and the Chinese controlled territory of Hong Kong has unveiled plans to become a crypto hub.

Bruce Lee lives again via NFTs

On Apr. 12, the Bruce Lee Foundation announced it would partner with NFT video platform Shibuya to launch a collection of genesis NFTs featuring the late legendary martial arts actor, who died in 1973 at the age of 32 under mysterious circumstances. The House of Lee collection is one sale on Manifold from Apr. 12 to Apr. 14 and is minted on the Ethereum network, with digital image storage on Arweave.

There is no limit to the number of NFTs minted during the sale. At the time of publication, over 19,592 House of Lee digital collectibles have been minted with a current floor price of around 0.008 Ether. The Bruce Lee NFT was drawn by artists Maciej Kuciara and Emily Yang, with its design inspired by Shannon Lee, daughter of Bruce Lee and president of the Bruce Lee Estate. An Ethereum Name Service address has also been registered for the collection at bruceleeofficial.eth.

China’s 30M crypto users despite ban

According to a joint research report published on Apr. 10 by Foresight News, CoinNess, and BlockTempo, China still has around 30 million crypto users, representing around 2.12% of its population, compared to 12% for the U.S. and 11% for Taiwan. Researchers cited the Sept. 2021 People’s Bank of China ban on crypto-fiat transactions as “the nail in the coffin” for the industry in China.

That said, the report also noted Hong Kong is becoming a rising hub of blockchain technology in Asia. In Feb. 2023, the Hong Kong Securities and Futures Commission (SFC) proposed a pathway for exchanges to obtain regulatory licenses through fulfilling the custody, know-your-customer, record-keeping, and risk management requirements. The policy is scheduled to come into effect on June 1, 2023.

Interestingly, Foresight wrote that despite tailwinds from a spending campaign during the 2022 Beijing Winter Olympics, only 13.61 billion of China’s digital yuan central bank digital currency (CBDC) were in circulation, representing just 0.13% of China’s M0 or outstanding monetary supply. “Trade settlement applications are still in development and are only accepted by very limited partners,” the firm noted.

Despite headwinds, three major venture capital firms, Hashkey Capital, Dragonfly, and Foresight Ventures, are still active in the mainland China region. Notable projects tracing their origins from China include Conflux, Alchemy Pay, Animoca Brands, and CertiK.

Hong Kong’s rising Web3 power

On Apr. 12, more than 10,000 crypto enthusiasts and 300 guest speakers gathered in Hong Kong for the special administrative region’s annual Web3 Festival. During its debut, Lee Ka-Chiu, chief executive of Hong Kong, pledged to allocate 700 million Hong Kong dollars ($89.17 million) from this year’s budget to accelerate the development of digital assets and Web3 technologies in the region. Chan Mo-Po, the financial secretary of Hong Kong, also commented:

“Web3 is in its infancy, and the current common applications include cryptocurrency, decentralized exchanges, digital identity verification, DeFi, blockchain games, and even NFT but it is conceivable that in the future there will be many more new applications and opportunities. From a historical point of view, the development of Web3 will grow rapidly again after going through the shock stage.”

Justin Sun’s dream rendezvous with socialite overshadowed by legal woes

For Justin Sun, founder of Tron and de facto owner of cryptocurrency exchange Huobi Global, the 2023 Hong Kong Web3 Festival appears to be the pinnacle of his blockchain career. First off, before his arrival, Sun claims to have successfully turned around Huobi’s operations after years of stagnation, posting an impressive profit of $30 million in Q1 2023.

Then, with an aura of awe, the blockchain personality dispelled rumors that he was arrested in Hong Kong on arrival. In 2019, Sun allegedly hired a smuggler to help him bypass mainland China’s border controls and escape the country. This has been linked to exit restrictions due to his involvement in the initial coin offering (ICO) of Tron, which took place days before China banned ICOs. Sun has been out of mainland China ever since. Interestingly, no extradition agreement exists between China and Hong Kong, after a bill for such measure was quashed by a pro-democracy student uprising in 2019. The protests, in turn, were quashed by China’s central government.

Thanks to the sacrifice of the students, Sun was able to land in Hong Kong safely and meet face-to-face with Nina, an iPollo community ambassador whom Sun wants to feature in a Huobi beauty pageant and “[personally] guarantee as a final contestant in the Top 20.” Unfortunately, not everyone appears to be dazzled by Sun’s attempt at flirtation. As Sun’s euphoria reached its peak whilst partying onboard a Binance yacht, the U.S. Securities and Exchange Commission issued a subpoena for Sun on Apr. 12, kindly reminding him of his obligation to appear in court on charges of fraud and securities law violations.

“If you fail to respond, judgment by default will be entered against you for the relief demanded in the complaint. You also must file your answer or motion with the court.”

The SEC complaint, filed on Mar. 26, alleges Sun and his companies, Tron and BitTorrent, “fraudulently” manipulated the secondary market for Tron tokens through “extensive wash trading,” conducting more than 600,000 such trades, and also paid numerous American celebrities to promote TRX and BitTorrent (BTT) tokens with zero disclosure.

Sun has since stated that the SEC complaint “lacks merit” and that the regulatory body is “still in its infancy and is in need of further development” with regards to digital assets. The lawsuit is ongoing. Around the same day of the subpoena, Binance.US announced that it would be delisting TRX from its platform.

Huobi Global’s token crash and ongoing layoffs, 3AC founders deny reports of $1.26 in day 1 volume on new exchange and claim $373 on day 2.

Our weekly roundup of news from East Asia curates the industrys most important developments.

Blowing up a Singaporean crypto hedge fund worth an estimated $10 billion at its peak was, by all means, a life-changing event for its co-founders Kyle Davies and Zhu Su. It appears that the trauma from the incident had been so severe that the two executives embarked on a series of spiritual journeys starting mid-2022 to transcend the effects of Three Arrows Capitals (3AC) bankruptcy.

The voyage appears to have been fruitful. From escaping the pursuit of creditors, to making philosophical observations after witnessing the deaths of German tourists, to discovering the grace of Allah through Islam, to reigniting their passion for life through the culinary arts, to finding companionship in Japanese NFT avatars, Davies and Su may have finally found the answer to overcoming lifes hardships: If you dont get it right the first time, keep trying until you succeed.

After reportedly soliciting $25 million from investors in January, the former 3AC co-founders launched the OPNX exchange on April 5. The exchange is designed to trade bankruptcy claims of fallen crypto entities, such as their own bankrupt hedge fund. It is unclear how the highly personalized and private nature of bankruptcy claims can allow them to be traded on a public exchange without prior approval from bankruptcy trustees or courts.

Nevertheless, Davies and Su decided to press forward with the idea anyway. On the first day of trading, the total trading volume on OPNX in the previous 24 hours was reportedly $1.26. The report drew swift condemnations from OPNX, which clarified that the exchanges 24-hour trading volume was actually $13.64, or 982% more than stated.

On the second day, Zhu Su claimed that the exchange facilitated $373 in trading volume after a media blitz brought much attention to the lackluster results. However, with great power comes great responsibility. Despite improving the exchanges trading volume by 2,634% in one day, OPNXs traction was partly derailed by Twitter suspending its official account due to terms of use violations.

Su has since created a Chinese Telegram channel for official OPNX communications. Meanwhile, the two were kindly reminded by critics once again that despite their continued entrepreneurship, creditors are still claiming an estimated $3.5 billion from their defunct hedge fund.

Huobis liquidation controversy

In a letter submitted to Chinese news aggregator Odaily.news, cryptocurrency exchange Huobi Global appears to have presented its side of the story regarding a flash crash that affected its native Huobi Token (HT) on March 10.

On the date of the incident, HT plunged to as low as $0.31 apiece from a high of $4.85 before subsequently recovering most of its losses. It currently trades at $3.58 at the time of publication.

According to Huobi, the incident was caused by industry-wide macro events relating to the recent failure of American tech banks. Under such downward pricing pressures, repeated selling by big investors, and lack of liquidity with the HT token, led to margin liquidations, and in turn caused many leveraged investors to suffer losses,” Huobi wrote.

The event led to big losses among users who pledged HT as collateral for loans or were simply holding the token with leverage. Amid the guidance of self-proclaimed adviser and de facto owner of Huobi, Tron founder Justin Sun, Huobi rolled out a compensation program for users affected by the HT flash crash, claiming that more than 98% of affected users have negotiated a satisfactory solution with the platform and received compensation.”

However, one user, Lantian666, says he lost nearly $4 million during the incident and that his losses are yet to be fully compensated by Huobi. In the Odaily letter, Huobi acknowledged that one user lost an estimated $2.9 million after the flash crash caused liquidations. Lantian666 posted a series of screenshots and claims that Huobis customer service had only agreed to waive a portion of liquidation fees, which are nowhere close to his loss on trading positions.

Sun has stated that Huobi will bear all leverage-through position losses on the platform resulted from this market volatility event of HT.” Huobi has stated that it seeks to reach a consensus as soon as possible with the remaining users who still have doubts about the current solution and negotiate a more satisfactory solution.” However, the exchange also wrote it did not want such compensation to encourage users to engage in high-risk leveraged transactions.”

Justin Suns troubled acquisition

According to purportedly leaked employee screenshots on April 4, Huobi Global plans to cut its staff count by a further 200, and the exchange is apparently not yet profitable. Last November, Sun reportedly acquired 100% of a co-founders stake in the exchange through his entity About Capital.

There have been issues ever since but the exchange had issues before as well. Early this year, Huobi reportedly slashed its employee benefits and laid off as much as 20% of its staff. The exchanges market share had fallen from an estimated 5.4% in the first quarter of 2022 to 2.2% in the final quarter. On April 5, Sundeniedthat he was in talks to sell his Huobi stake to Binance.

Huobi was one of the largest cryptocurrency exchanges in the world, holding 19% market share in 2020 before Chinas crypto exchange ban took effect, and it had to say goodbye to much of its user base. Sun apparently has a plan to get around the ban as part of its turnaround. The proposed scheme involves leveraging Huobis digital identity partnership with the Caribbean island of Dominica. Mainland Chinese users can register for Dominicas digital citizenship, then reportedly use their new citizenship documents to create a Huobi account.

Sun is currently facing a lawsuit from the United States Securities and Exchange Commission over allegations of market manipulation related to the Tron and BitTorrent tokens. Recent reports also indicate that Sun was stripped of his status as Grenadas ambassador to the World Trade Organization last June, depriving him of the fancy title his excellency and access to a diplomatic passport that grants him theoretical immunity against prosecution.

Microsofts new blockchain partnerships

According to a recent announcement, Singaporean gaming studio Metagame Industries has joined the Microsoft for Startups Founders Hub through the ID@Azure Program. The partnership with Microsoft will explore the use of AI and cloud computing in Web3 game development.

Metagame Industries will receive Azure credits, OpenAI Services, technical support and business development resources as part of the agreement. We’re excited to work with Microsofts tools and technology to create innovative and immersive gaming experiences,” said Joe Zu, CEO of Metagame Industries.

The firm is the developer behind Abyss World, a third-person, dark fantasy action role-playing game scheduled to launch on Mysten Labs Sui blockchain in Q4 2023. Abyss World will feature an in-game NFT factory that enables the minting of digitized weapons and heroes via monster drops.

Token rewards will also be available to players who complete special tasks in the PvE section, climb the game leaderboard, and win PVP arena seasons. Developers also plan to implement an Abyss World decentralized autonomous organization (DAO) to regulate game tasks such as new systems and the introduction of new character sets.

Asia Express previously reported that Microsoft has partnered with decentralized blockchain infrastructure provider Ankr on Microsoft Azure. Rashmi Misra, Microsofts general manager of artificial intelligence and emerging technologies, commented that its partnership with Ankr will allow projects to access blockchain data in a reliable, scalable, and secure way.” The tech conglomerate is also reportedly testing a Web3 wallet integration for its native internet browser, Microsoft Edge.