Crypto Exchange Executives and 29 Other People Accused of Running $24,560,000 Fraud Scheme in Taiwan: Report

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December 5, 2023 Coin Telegraph

Coin Telegraph

The Financial Supervisory Commission considers itself to be “in the exploratory phase” for crypto exchange-traded funds.

Taiwan’s principal financial regulator, the Financial Supervisory Commission (FSC), is considering allowing crypto exchange-traded funds (ETFs) in the country, but only after analyzing the product’s development in other markets worldwide.

According to a Dec. 5 report in the Taiwanese newspaper, the Commercial Times, the FSC is closely watching developments in the United States, where the Securities and Exchange Commission will review spot Bitcoin (BTC) ETFs in January.

The FSC also reportedly acknowledged the launch of numerous cryptocurrency futures commodities listed on the Toronto Stock Exchange, the New York Stock Exchange, the Nasdaq Exchange, the Chicago Board Options Exchange and the Hong Kong Stock Exchange, among others.

The FSC intends to gradually liberalize the rules for digital asset trading, but it should rely on “self-discipline and regulation.” According to the report, Taiwanese regulators have repeatedly blocked crypto ETF initiatives by local investment banks in recent years due to the high volatility of cryptocurrencies.

Cointelegraph reached out to the Financial Supervisory Commission for further information.

Crypto regulatory developments have recently accelerated in Taiwan.

Taiwanese crypto exchange and VASP member Bitgin under investigation for money laundering

November 13, 2023 Coin Telegraph

Bitgin

The exchange confirmed its chief operating officer’s brief relationship with an alleged money laundering group in a statement on Nov. 13.

Taiwanese cryptocurrency exchange Bitgin is under investigation by the country’s police force for money laundering. According to local news reports early this week, Yuting Zhang, the firm’s chief operating officer, was arrested by Taiwanese police for his alleged role in the “Eighty-Eight Guild Hall” money laundering incident.

Previously, Zhemin Guo and Chengwen Tu, two local businessmen, were accused by police of operating a multibillion-dollar money laundering scheme by using their foreign exchange offices and crypto exchange accounts to launder proceeds of crime obtained via wire fraud from overseas. Tu is also accused of defrauding the country’s tax authorities by claiming 300 million New Taiwan dollars ($9.28 million) in fraudulent export tax refunds through the overseas sale of video game credits.

Taiwan currently has no official licensing regime for cryptocurrency exchanges. In September, Bitgin, along with its industry peers, created the Virtual Asset Service Provider Preparatory Office for the purposes of self-regulation and lobbying of political officials. Regarding the incident, Yuling Tsai, general counsel of the Taiwan VASP Association, said:

“This time, a member of the preparatory group were involved in the investigation case. The preparatory group immediately held a meeting and issued a public response. The members involved in the case also took the initiative to suspend participation in the work of the preparatory group."

In a statement on Nov. 13, the exchange said that its operations “are normal and user rights will not be affected.” As told by Bitgin, chief operating officer Zhang was involved with firms of the Eighty-Eight Guild Hall money laundering incident from late 2021 to March 2022. However, Bitgin said that Zhang ceased all communications with the counterparties after discovering money laundering allegations.

“At present, Bitgin is fully cooperating with the investigating unit and actively providing all necessary assistance to ensure the smooth conduct of the investigation and hopes that the facts can be clarified as soon as possible.”

Financial Supervisory Commission of Taiwan awards first securitized token license

November 9, 2023 Coin Telegraph

Cathay Securities

Cathay Securities is permitted to issue $930,000 worth of tokenized green bonds every six months.

Taiwan's financial watchdog, the Financial Supervisory Commission (FSC), has awarded the country's first security token offering (STO) license to Cathay Securities.

According to local news reports on Nov. 9, Cathay received regulatory approval for its "Sunshine Green Yield" STO bonds with a time to maturity of six years, initial annual interest of 3.5%, and an initial principal amount of 30 million New Taiwan Dollars ($0.93 million).

Through the token subscriptions, enterprise owners can purchase green electricity on the market for environmental, social, and corporate governance initiatives under favorable conditions and receive variable interest rate payments of up to 5.8% per year. Trading for the Subshine Green Yield bonds will debut on Dec. 12 on Cathay's in-house STO exchange platform.

Since 2019, the FSC has classified tokenized assets as securities, with an open pathway for financial institutions to apply for licensing. However, issuers must comply with a $930,000 fundraising limit and only conduct a maximum of two STOs per year. The offerings are also only available to enterprises and accredited investors, and in the case of the latter, they can only purchase a maximum of $9,300 STOs.

To create credible STO interest rate pricing, Cathay Securities partnered with risk-control technology company Numerix and professor Ye Zongying at National Chung Hsing University to develop Taiwan's first STO evaluation model. The firm claims that the model is "95% accurate" in calculating the default probability of small and medium-sized businesses.

Founded in 2004, Cathay Securities is one of the largest financial services firms in Taiwan. The company serves millions of investors and brokerage clients.

JPEX scandal: Taiwan determines new suspects in alleged fraud — Report

November 9, 2023 Coin Telegraph

Coin Telegraph

Taiwan prosecutors want Chang Tung-ying, chief partner at JPEX’s office in Taiwan, to be held in custody over alleged fraud.

The saga of the imploded cryptocurrency exchange JPEX continues to develop as Taiwanese prosecutors have reportedly found new alleged suspects.

The Taipei District Prosecutors Office (TDPO) requested Chang Tung-ying, the chief partner at JPEX’s office in Taiwan, be held in custody over alleged fraud, the local TV channel TVBS News reported on Nov. 9.

Taipei prosecutors reportedly searched nine locations related to the JPEX investigation and summoned Chang and three other alleged suspects. The authorities identified Chang and JPEX lecturer Shih Yu-sheng (also called Shi Yu) as suspects in the case for violating the Banking Act and the Money Laundering Control Act.

Other defendants were released, including JPEX salespersons Liu Chien-fu and Niu Keng-sheng. According to the report, Liu was released on bail of 50,000 new Taiwan dollars ($1,550), while Niu, a registered person in charge of JPEX Taiwan, was released after questioning.

The report also noted that Nine Chen, a Taiwanese celebrity and singer who once represented JPEX as a brand ambassador, was also summoned by prosecutors. Prosecutors reportedly named Nine Chen as a defendant after initially calling him to testify as a witness.

*Nine Chen as JPEX brand ambassador. Source: JPEX*

Once a successful crypto exchange, JPEX abruptly halted some services in mid-September 2023, citing a liquidity crisis triggered by “unfair treatment” from several institutions in Hong Kong. The abrupt implosion fueled allegations about JPEX misleading investors by claiming to have applied for a crypto trading license and other issues.

JPEX quickly became the center of a major scandal in the industry. Hong Kong authorities launched an investigation after receiving over 2,000 complaints from JPEX users reporting nearly $180 million in losses. The implosion of JPEX has become a significant concern for financial regulators in Hong Kong, Taiwan and other countries, with many authorities initiating new measures to protect investors from losses due to similar incidents.

As of Sept. 25, law enforcement has arrested at least 11 alleged suspects in the JPEX case, while the alleged masterminds are still at large.

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Taiwan introduces crypto bill to parliament

October 27, 2023 Coin Telegraph

Coin Telegraph

The Virtual Asset Management Bill aims to provide “better protection” for customers and “properly supervise” the industry.

On Oct. 25, Taiwanese legislators introduced the Virtual Asset Management Bill to the unicameral parliament, the Legislative Yuan. The bill aims to provide “better protection” for customers and “properly supervise” the industry.

The 30-page bill appears moderate in its demands for the industry. It suggests some common-sense obligations for virtual asset service providers (VASPs), such as separating customer funds from the company’s reserve funds, establishing an internal control and audit system, and joining the local trade association.

However, at this point, it doesn’t require stablecoin issuers to hold a 1:1 ratio of reserve funds, and it doesn’t mention algorithmic stablecoins. As to marketing activities, the rules for advertising are to be determined by the “competent authority.”

The bill suggests fines for VASPs operating without a license — no less than 2 million Taiwanese dollars (around $60,000) and no more than 20 million TWD ($600,000). The companies already operating in the Taiwan market will have six months to obtain a license after the bill comes into force.

In September 2023, Taiwan’s Financial Supervisory Commission (FSC) also released industry guidelines for VASPs. The FSC prohibits foreign VASPs from providing their services in Taiwan without obtaining the necessary approvals from the regulator.

The rules were created as major cryptocurrency exchanges in Taiwan have formed a self-regulatory association. On Sept. 26, local exchanges such as MaiCoin, BitstreetX, Hoya Bit, Bitgin, Rybit, Xrex and Shangbito joined forces to create the Taiwan Virtual Asset Platform and Transaction Business Association. They aim to support the crypto industry and work with regulators.

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Circle launches ‘points-to-crypto’ program with Taiwan convenience store chain

October 26, 2023 Coin Telegraph

Circle

The partnership will allow FamilyMart customers to exchange their loyalty points for the Circle-issued USDC.

United States-based stablecoin issuer Circle has announced a partnership with Taiwan’s second-largest convenience store chain, FamilyMart, and a local crypto exchange, BitoGroup. According to the company’s press release from Oct. 26, it will deliver a new “Points-to-Crypto” service on the FamilyMart app.

This will allow FamilyMart customers to exchange loyalty points for the Circle-issued USD Coin (USDC). Customers will be able to withdraw the equivalent of FamiPoints to their BitoPro wallets. The release explains:

“Converting FamiPoints into USDC prevents a loss of value in loyalty points over time and incurs zero transaction fees, democratizing access to cryptocurrencies.”

Circle emphasizes the significance of loyalty points in Taiwan, citing a 2021 report by the Market Intelligence & Consulting Institute (MIC), which found that 87% of Taiwanese users engage in points accumulation, with an overwhelming 99% utilizing points for product redemptions.

FamilyMart’s FamiPoints have reportedly attracted over 17 million members nationwide, while BitoGroup claims a membership base of around 800,000 users.

In early October, Circle announced a strategic partnership with Coins.ph, a major cryptocurrency exchange and digital wallet provider in the Philippines.

Taiwan may get the first draft of a new crypto law by the end of November 2023. In September, Taiwan’s Financial Supervisory Commission formulated the key points for regulating Taiwan’s cryptocurrency market, releasing industry guidelines for virtual asset service providers operating in the country.

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Taiwan

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