Hong Kong police recover $11M worth of assets in JPEX case: Report

September 27, 2023 Coin Telegraph

Hong Kong police recover M worth of assets in JPEX case: Report

The JPEX scandal has grown to become one of the largest fraud cases in the country, with over 2,300 victims and losses estimated at over $175 million.

The Secretary for Security of Hong Kong, Chris Tang Ping-keung, has vowed to bring justice to people who fell victim to the JPEX crypto exchange fraud, local media has reported. In a press conference on Wednesday, Sept. 27, the security chief’s office said police are actively looking for the key operators behind the JPEX crypto exchange that orchestrated the country’s largest digital asset fraud.

During the press conference, Tang Ping-keung revealed that the police had made 12 arrests in the case so far and seized more than 8 million Hong Kong dollars ($1 million) in cash, as well as assets worth 77 million HK$ ($9.8 million), including real estate and digital currency, according to a report by the South China Morning Post.

Tang added that the police were actively looking for the ringleaders in the case and called their capture a major factor in solving it.

The operators of the JPEX crypto exchange are accused of running an unauthorized crypto platform and defrauding customers of millions of dollars. Tang also notified the press that they are working with the country’s regulators to put specific measures in place to avoid any such fraud in the future.

Local police in Hong Kong received 2,369 complaints from victims who lost their hard-earned money by investing in the unregulated exchange. The total monetary value of the fallout is estimated to be around 1.4 billion HK$ ($178 million).

The police have made 12 arrests in the case, including three JPEX Technical Support Company employees, along with two YouTubers, Chan Wing-yee and Chu Ka-fa.

The first signs of trouble related to JPEX emerged on Sept. 15 when several users complained about difficulty withdrawing funds. As the news about withdrawal issues gained traction, the platform notoriously raised its withdrawal fees to 999 Tether to deter users from withdrawing funds after a warning from regulators.

Deposit risk: What do crypto exchanges really do with your money?

Bitcoin gains legal recognition as digital currency in Shanghai China

September 26, 2023 Coin Telegraph

Bitcoin mining

A similar report from another Chinese court earlier in September recognized cryptocurrencies as virtual properties protected by law.

The Shanghai Second Intermediate People's Court in China has reportedly recognized Bitcoin as a unique and non-replicable digital asset while acknowledging its scarcity and inherent value.

The Chinese court released a report on Sept. 25 discussing the development of internet technologies. The report noted that with the development of Internet technology, digital currencies such as Bitcoin stand out as unique and non-replicable. The report noted that among a sea of virtual currencies, Bitcoin is different and unique from the rest of the digital assets.

The report also shed light on some of the unique properties of Bitcoin including its relative scarcity and property attributes. The report noted that Bitcoin inherits key currency features such as scalability, ease of circulation, storage, and payment. Bitcoin continues to see global usage despite its decentralised nature and lack of central authority administration.

The latest judicial report acknowledging Bitcoin and its attributes as an asset class gives Bitcoin and other digital currencies in China more legitimacy. Despite a blanket ban on cryptocurrencies in China, legal arguments for defining bitcoins as personal property have gained a lot of traction from the local Chinese courts.

The latest recognition from one of the key courts in Shanghai comes despite the hostile attitude of Beijing towards Bitcoin. China imposed a blanket ban on all forms of cryptocurrency activities including Bitcoin mining in 2021. However, several courts in China over the years have recognized Bitoin and other digital assets as legal properties protected by law.

As Cointelegraph reported earlier this month, a People’s Court in China released a report assessing the legality of virtual assets and analyzing the criminal law attributes of these digital assets. The report observed that digital assets qualify as legal property and thus are protected by the law.

Collect this article as an NFT to preserve this moment in history and show your support for independent journalism in the crypto space.

Magazine: DeFi faces stress test, DoJ fears run on Binance, Hong Kong’s crypto trading: Hodler’s Digest, July 30–Aug. 5

Chamber of Digital Commerce launches Digital Power Network miners’ coalition

September 19, 2023 Coin Telegraph

bitcoin regulation

The new advocacy group already represents over half the country’s Bitcoin hash rate and will seek to shape energy policy and champion Bitcoin and blockchain.

Cryptocurrency miners have a new voice in Washington with the launch of the Digital Power Network (DPN), a new coalition affiliated with the Chamber of Digital Commerce. The network is off to a promising start, with many of the United States’ biggest miners on board.

The DPN is the first affiliate of the Chamber, and shares many of the same team members. Its origins stretch back to the Chamber’s Mining Initiative, which “pioneering the introduction of the first pro-proof-of-work resolution in the U.S. House of Representatives.”

Rep. Pete Sessions' resolution on proof-of-work crypto mining. Source: govinfo.gov

Alena Ricci, vice present of marketing at the Chamber and head of marketing at the DPN, explained to Cointelegraph that the resolution was submitted by Texas congressman Pete Sessions in March. “Bitcoin Mining will play a critical role in rebuilding energy independence in the USA,” Sessions tweeted at the time.

The DPN is debuting with 11 members – Argo, BitDigital, BitFarms, Coinmint, Cipher Mining, DigitHost, Hive, Marathon, Riot, Sustainable Bitcoin Protocol and Terawulf. Together they represent over 50% of the U.S. Bitcoin (BTC) hash rate, the DPN said. According to a statement:

“The Digital Power Network spearheads policy advocacy for digital asset mining and shapes the future of energy policy. Its mission is to champion Bitcoin and blockchain technology to revolutionize energy markets.”

The DPN has its work cut out for it. A bill reintroduced into Congress in March, prior to Sessions’ resolution, would require the Environmental Protection Agency to investigate crypto miners. The Biden Administration included a 30% tax on electricity used by crypto miners in its FY2024 budget, although that proposal may have been dropped.

Exciting News!

Today, we're thrilled to announce the launch of @digitalpowerUS, a visionary consortium that's set to revolutionize the energy landscape! Representing over 50% of U.S. #Bitcoin Hash Rate, this initiative is a game-changer for the future of energy policy. pic.twitter.com/8wtpRy1dyD
— Perianne (@PerianneDC) September 19, 2023

The DPN will work alongside the Digital Energy Council, a lobbying group founded in August by former Chamber director of energy policy Thomas Mapes.

Magazine: Bitcoin is on a collision course with ‘Net Zero’ promises

South Korea focuses on OTC crypto regulations as unlawful deals reach $4B

September 18, 2023 Coin Telegraph

South Korea focuses on OTC crypto regulations as unlawful deals reach B

bitcoin regulation

According to the Korea Customs Service report, the value of unlawful foreign exchange transactions made using digital currency was estimated to be worth $4 billion last year.

South Korean regulators have turned their focus to over-the-counter (OTC) crypto trades amid growing concerns about their use for criminal activities. The financial regulators in the country are reportedly monitoring trading in the OTC crypto market.

According to a report published in a local daily, deputy chief prosecutor Ki No-Seong and Park Min-woo of the Financial Services Commission (FSC) and other vital regulatory officials attended a session on “Criminal Legal Issues Related to Virtual Assets” with a focus on the unregulated OTC crypto market. During the event, No-Seong called for regulating the OTC crypto market due to money laundering concerns.

A Google-translated version of Seong’s statement read:

“Illegal virtual currency OTC companies have overseas corporations and are engaged in the business of converting illegally obtained virtual currency into Korean won or foreign currency. There is a need to regulate these companies as undeclared virtual asset trading businesses.”

The term “OTC crypto market” describes exchanges that are not officially recognized by the government. Digital currency OTC transactions include all transactions outside regulated platforms, including peer-to-peer (P2P) exchanges. According to the report, there are a total of 172 cryptocurrencies available on Upbit, the largest regulated crypto platform in South Korea, while OTC platforms offer up to 700 cryptocurrencies.

The report cited several instances of the use of OTC platforms to convert digital assets into Korean won. The International Crimes Investigation Department of the Incheon District Prosecutors’ Office arrested and indicted three people on charges of engaging in illegal foreign exchange transactions between October 2021 and October 2022.

The arrested trio were found to be purchasing $70.9 million (94 billion won) worth of digital currency from overseas OTCs at the request of Libyans and then sending it to Korea to be converted into cash, according to the report. The value of unlawful foreign exchange transactions made using digital currency was estimated by the Korea Customs Service to be worth $4 billion (5.6 trillion won) last year.

Over the years, South Korea has become known for its stringent crypto regulations and has several regulations in place to tackle crypto-related crimes. The country’s regulators have become more proactive in the wake of Terra’s collapse.

Collect this article as an NFT to preserve this moment in history and show your support for independent journalism in the crypto space.

Magazine: Big Questions: Did the NSA create Bitcoin?

South Korean Bitcoin lender Delio plans to sue regulators: Report

September 14, 2023 Coin Telegraph

bitcoin regulation

South Korean financial regulators accused Delio of fraud and embezzlement and seized its assets in July earlier this year.

South Korean Bitcoin lender Delio is reportedly preparing for an administrative lawsuit against regulators for the wrong interpretation of law leading to an investigation and hefty fine against the crypto lending firm.

Bitcoin lender Delio said the allegations of fraud and embezzlement levied by the Financial Service Committee (FSC) are baseless, according to a report published in a local daily. The crypto lender claimed that the regulator implied the law unreasonably in a situation where there were no clear regulations for virtual asset deposit and management products.

The report revealed that the Financial Intelligence Unit (FIU) recommended the dismissal of Delio CEO Jeong Sang-ho through a sanctions announcement on Sept. 1. Delio claimed that this was a clear indication that the financial authorities were putting pressure on Delio to close down the business rather than giving them a chance to revive. The FIU also imposed a three-month business suspension on Delio and a fine of $1.34 million (1.83 billion won.)

The firm also warned that the assets seized by regulators could put its operations in jeopardy.

Delio CEO Jeong Sang-ho said that these FIU sanctions leave a lot of room for unreasonable legal interpretation and arbitrary application,” and such behaviour by financial authorities could kill the domestic virtual asset industry.”

The major issue of conflict remains the interpretation of the existing laws, around whether a lending company that lends cash using virtual assets as collateral is considered a virtual asset business operator and whether the act of imposing a lock-up constitutes 'storage' of virtual assets under the Special Financial Services Act.

Delio argued that it is unclear whether virtual asset deposits and management products are considered financial products under the current law. One of the lawyers for the firm noted that there are no provisions for virtual asset-related laws and regulations regarding the virtual asset management business.

The lawyer said that the FIU arbitrarily interpreted virtual asset deposits and management products as financial investment products and sanctioned them which is the case of wrong interpretation of the law.

Magazine: Home loans using crypto as collateral: Do the risks outweigh the reward?

Binance crypto exchange saw departure of 10 key executives in 2023. Here’s the list

September 7, 2023 Coin Telegraph

Binance

Binance CEO Chang Peng Zhao sought to dismiss concerns around executive departures, claiming these executives are moving into bigger roles outside Binance, and said reports are market FUD.

The world’s leading crypto exchange by trading volume Binance has seen the departure of 10 key executives from various departments in the first nine months of 2023. While executive departures from a company are a norm based on their preset contractual obligations, the number of executives leaving Binance amid growing regulatory troubles has been a key talking point in the crypto community.

The latest to join the list is Helen Hai, the executive vice president of the crypto exchange, who announced her resignation from her post on Sept. 6. On the same day, Gleb Kostarev, Binance’s vice president of Eastern Europe, Turkey, the Commonwealth of Independent States, Australia, and New Zealand, also announced his resignation, as did Russia and CISgeneral manager Vladimir Smerkis.

The list of key executives to leave Binance in 2023:

September 6, 2023: Helen Hai, Binance Executive Vice President and Head of Global Fiat, announces resignation.
September 6, 2023: Vladimir Smerkis, general manager for Russia and CIS at Binance announced his departure.
September 6, 2023: Gleb Kostarev, Binance Vice President of Eastern Europe, Turkey, the Commonwealth of Independent States, Australia, and New Zealand, announces his resignation.
September 4, 2023: Mayur Kamat, Binance Product lead, announces resignation.
August 31, 2023: Leon Foong, Binance Head of Asia-Pacific, announces resignation.
July 7, 2023: Steven Christie, Binance senior vice president for compliance, announces resignation.
July 6, 2023: Patrick Hillmann, Binance's chief strategy officer, announces resignation.
July 6, 2023: Han Ng, Binance general counsel, announces resignation.
July 6, 2023: Steve Milton, Binance Global vice president of marketing and communications, announces resignation.
July 6, 2023: Matthew Price, Binance Senior Director of Global Investigations and Intelligence, announces resignation

Four top executives from Binance reportedly all left on the same day after Binance’s response to the Department of Justice investigation. A Fortune report claimed that these top executives were not happy with the crypto exchange's response. However, Binance CEO Chang Peng Zhao dismissed all such reports labelling them as FUD.

4. More FUD about some departures. Yes, there is turnover (at every company). But the reasons dreamed up by the “news” are completely wrong.

As an organization that has grown from 30 to 8000 people in 6 years, from 0 to the world’s largest crypto exchange in less than 5 months…
— CZ Binance (@cz_binance) July 6, 2023

Zhao took to X (formerly Twitter) to address the growing chatter around the departure of key executives again on Sept. 6. While reposting a Cointelegraph report on the Kostarev exit, Zhao said that many members from Binance are moving into bigger roles, some outside of Binance as well.

Some of our team members are growing into bigger roles, some outside of #Binance. Some are doing new exciting ventures. I even made intros/references for many of them. We are supportive of everyone. We are one community.

This also creates more growth opportunities within…
— CZ Binance (@cz_binance) September 6, 2023

Cointelegraph reached out to Binance to enquire about the community concerns around executive departures but Binance said they don’t have any comments to offer.

Most of the executives leaving the crypto exchange have said that their departure was routine and they share a good relationship with the crypto exchange and its CEO. However, the crypto community has become a bit more sceptical about exchanges post-FTX collapse.

Binance over the years has faced regulatory troubles in more than a dozen countries. The crypto exchange on-boarded many former government officials and compliance officers to help it mitigate the regulatory complexities, however, in 2023, many of these executives have left the crypto exchange.

Magazine: Crypto regulation: Does SEC Chair Gary Gensler have the final say?

Rejection of crypto bill exposes Aussies to ‘unregulated market’ — Senator Bragg

September 7, 2023 Coin Telegraph

Australia

Senator Andrew Bragg says rejecting his crypto bill will drive investment away from Australia but lawyers claim it's part of a bigger regulatory picture.

Australian investors will be left exposed to unregulated markets and investments will be driven away from the country if the Digital Assets (Market Regulation) Bill is rejected by parliament, the bill's author Senator Andrew Bragg has warned.

On Sept. 4, the Senate Committee on Economics Legislation recommended the Senate reject Bragg’s bill and suggested the government instead continue to consult the industry on developing crypto regulation.

The Committee’s chair, Labor Party Senator Jess Walsh, wrote in a report that it recommended the bill not be passed as it “fails to interoperate with the established regulatory landscape, creating a genuine concern for regulatory arbitrage and adverse outcomes to the industry.”

In emailed comments to Cointelegraph, Bragg criticized the committee’s recommendation saying it would “expose consumers to an unregulated market, and drive investment offshore.”

“The benefits of digital asset regulations are twofold: They protect consumers and promote market investment and activity. This was why these regulations were placed on the legislative agenda by the former Liberal government in October 2021.”

Bragg perceived the rejection of his bill as a largely partisan-motivated decision, due to the number of Labor Party members presiding on the Senate Committee and slammed their decision to oppose his draft bill claiming it “stalled the implementation of digital asset regulations in Australia.”

“Australia would have a regulated digital assets market. Instead, it is close to the end of 2023, and the government has no plan to implement these regulations,” Bragg said.

While Bragg blamed partisan politics, Liam Hennessey, partner at international law firm Clyde & Co., told Cointelegraph the rejection had more to do with a separate regulatory process — specifically the Treasury’s consultation paper on the government's “token mapping” exercise.

Hennessey said the recommended rejection of Bragg’s draft bill was “neither good nor bad” for crypto regulation in Australia.

“There’s no doubt that Senator Bragg's bill and the consideration and industry feedback it has received will be considered,“ he said. “The Senate is congested with legislation more broadly at present, so I do not think the delay is something that can be read into too much.”

“I think [Bragg’s] bill, and the work that went into it, will be valuable in informing the government's approach,” Hennessey concluded.

Last August the Labor government announced its token mapping exercise, which used the Treasury to “identify how crypto assets and related services should be regulated” and inform future regulatory decisions.

On Feb. 3 the Treasury released a public consultation paper on the exercise, announcing it as a foundational step in the government’s plan to regulate the digital asset market.

Since then, there’s been little mention of digital assets or the broader approach to regulating them from the government.

Bragg first introduced the Digital Assets (Market Regulation) Bill 2023 in March with the aim to “protect consumers and promote investors.”

The bill provides recommendations for regulating stablecoins, licensing exchanges and custody requirements.

The bill is before the Senate and is expected to be voted on during the next sitting session.

Magazine: Recursive inscriptions — Bitcoin ‘supercomputer’ and BTC DeFi coming soon

Additional reporting by Helen Partz.

OKX crypto exchange enters final stage of Hong Kong VASP license application

September 4, 2023 Coin Telegraph

bitcoin regulation

Hong Kong regulators have only approved a handful of crypto exchanges to date that are permitted to offer crypto retail trading services.

OKX cryptocurrency exchange has entered the final stage before acquiring a virtual asset service provider license (VASP) in Hong Kong. The crypto exchange expects the final approval for a VASP license by March 2024.

In an interview, Li Zhikai, the global chief commercial officer of OKX, said that it is actively engaged in a dialogue with the banks and is currently waiting for the group to be issued a license and start a business. The crypto exchange has started the preparatory work, such as technology docking.

Hong Kong became a pro-crypto nation in 2023 and announced a licensing regime for crypto exchanges to offer their services to retail customers. While more than 80 crypto firms initially showed interest in opening an office in the country, only a couple of crypto platforms, such as HashKey and OSL, gained the necessary license to start retail crypto trading services.

HashKey started offering retail crypto trading services to Hong Kong users on Aug. 28. The regulatory body in the country has opened only Bitcoin (BTC) and Ether (ETH) trading for retail customers to cut back on the risk involved with investing in new crypto tokens. The regulations also put a 30% cap on investors that only allows them to invest one-third of their net income.

Apart from HashKey and OSL, Huobi and Gate.io have also applied for retail crypto trading services and are waiting for the regulatory nod. Previously, a Gate.io executive shared the regulatory experience in Hong Kong and told Cointelegraph that compared with other regulators, the Hong Kong Securities and Futures Commission has stricter requirements for virtual asset service providers. The regulator has made it compulsory for crypto platforms to offer insurance and compensation arrangement requirements to help protect clients. Apart from that, the crypto exchanges must hold 98% of assets in cold wallet storage.

Cointelegraph reached out to OKX for its views on the regulatory experience and expectations from the Hong Kong retail market but didn’t get an immediate response.

Magazine: Hall of Flame: Wolf Of All Streets worries about a world where Bitcoin hits $1M

China court declares virtual assets legal properties protected by law: Report

September 1, 2023 Coin Telegraph

bitcoin regulation

Despite a blanket ban on cryptocurrencies imposed by Beijing in 2021, many Chinese courts over the years have established that virtual asset holders have property rights.

The People’s Courts of the People’s Republic of China exercise judicial power independently and are not subject to interference by an administrative or public organization. These courts try criminal, civil and administrative cases as well as economic disputes.

The report titled “Identification of the Property Attributes of Virtual Currency and Disposal of Property Involved in the Case” acknowledged that virtual assets have economic attributes and thus can be classified as property, reported a local daily. Although China has deemed all foreign digital assets illegal by imposing a blanket ban, the report argues that virtual assets held by individuals should be considered legal and protected by law under the current policy framework.

The report also added suggestions to deal with crimes involving virtual assets and noted that since the money and property involved in the case cannot be confiscated, it should be based on the unification of criminal and civil law. Such cases should be treated separately to achieve a balanced protection of personal property rights and social and public interests.

China imposed a blanket ban on all crypto-related activities and banned foreign crypto exchanges from offering their services to mainland customers. However, despite a hostile national policy on digital assets, the Chinese courts have offered a contrasting stance on Bitcoin (BTC) and other digital assets over the years.

The first instance of such difference arose in September 2022, when a lawyer suggested that crypto holders in China are protected by the law in case of theft, misappropriation or breach of a loan agreement despite the ban on crypto. Later in May 2022, a Shanghai court affirmed that Bitcoin qualifies as virtual property and thus is subject to property rights.

China’s hostile stance against Bitcoin and other cryptocurrencies has been a long-drawn one. However, over the past few years, the government seems to have softened its stance. This was evident from the rise in China’s Bitcoin mining share, which dropped to zero post blanket ban but rose to take the second spot within a year.

A People’s Court in China published a report on the legality of virtual assets analyzing the criminal law attributes of these digital assets. The court in its report noted that virtual assets under the current legal policy framework are still legal property and protected by law.

Magazine: DeFi faces stress test, DoJ fears run on Binance, Hong Kong’s crypto trading: Hodler’s Digest, July 30 – Aug. 5