Upbit Launches Campaign for Recovery of Mistakenly Transferred Assets

USDT, the leading U.S. dollar stablecoin issued by Tether, has been highlighted as a major conduit for money laundering and scams in Southeast Asia, according to a United Nations report released on Monday.Photo by Mathias Reding on UnsplashIllicit stablecoin useThe report has been titled “Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat.” It points out that online gambling platforms, particularly those operating illicitly, are among the favored channels for cryptocurrency-based money launderers, with a notable emphasis on the use of Tether or USDT. In a foreword to the report, Jeremy Douglas, the UN’s Regional Representative for Southeast Asia and the Pacific, noted that technology had aided crime networks in Asia, and in particular, the Mekong Delta region. Developing upon that idea, he added:”This has necessitated a revolution in the regional underground banking architecture, resulting in the development of systems and infrastructure capable of moving and laundering massive volumes of state-backed fiat and cryptocurrencies.”The report itself asserts that illegal and under-regulated crypto exchanges have become “foundational pieces of the banking architecture used by organized crime.” The document highlights law enforcement efforts in disrupting multiple money laundering networks linked to the illicit transfer of Tether funds. Last August, Singaporean authorities dismantled a network through an operation, recovering approximately $735 million in both cash and cryptocurrency. ‘Pig butchering’The UN report further suggests that USDT has been extensively employed in various underground fraud activities, including so-called "pig butchering" romantic scams. Last November, Tether froze $225 million in stolen USDT following investigations by Tether in collaboration with crypto exchange OKX and the U.S. Department of Justice. The money had been held in self-custodied wallets associated with an international human trafficking group in Southeast Asia orchestrating a pig-butchering scam. In December, Tether CEO Paolo Ardoino informed U.S. legislators in a shared letter that the company has enlisted the U.S. Secret Service and Federal Bureau of Investigation onto its platform. Later that month, the Chinese authorities uncovered a massive underground banking operation that was designed to evade the country’s foreign exchange controls. There was more related activity in December when it emerged that USDT has been integrated into the shadow economy in Cambodia, against a backdrop of the currency being prohibited for the purpose of trade within the Southeast Asian country. TRM Labs reportIn July of last year, a report by blockchain analytics firm TRM Labs, found that pro-ISIS terrorist groups in Central and Southeast Asia and the Middle East are increasingly using cryptocurrency, with a particular preference for USDT transacted over the Tron blockchain network. The UN report cites the popularity of USDT among those engaged in cyber-fraud and online casino operations, located in Myanmar, along the border with Thailand. Throughout 2023, Tether witnessed a notable expansion in its share of the global stablecoin supply, growing from 50% to 71%. At the time of writing, USDT has a market cap of $95 billion with stablecoins having an overall market capitalization of $134 billion. The UN's findings raise concerns about the stablecoin's role in facilitating illicit activities and underscore the need for enhanced regulatory scrutiny within the rapidly evolving crypto landscape.

Former PBOC Governor: CBDC Development Must Focus on SecurityZhou Xiaochuan, a former governor of the People’s Bank of China (PBOC), has issued a call for China to prioritize security and vigilance against potential misuse as it advances the development of its central bank digital currency (CBDC), known as the e-CNY.Photo by FLY:D on UnsplashSafeguarding the CBDC ecosystemXiaochuan made this appeal during the Digital Finance Forum, which was held in Beijing last week. He emphasized the necessity of safeguarding the CBDC ecosystem.The PBOC has been actively engaged in trials and innovations related to the e-CNY, even rolling out a pilot application in January 2022. The digital yuan’s journey, however, comes with significant responsibilities, particularly in terms of security and prevention of misuse.Thwarting potential abuseZhou acknowledged that in the realm of finance, security has always been a paramount concern, and this sentiment couldn’t be more accurate when applied to the realm of digital currency. He stressed that, as technology costs continue to decline and systems become more user-friendly, the risks associated with misuse also decrease. In this context, it becomes imperative for China to adopt stringent security measures and robust regulatory frameworks to thwart any potential abuse.Zhou underscored the illicit utilization of cryptocurrencies and stablecoins in facilitating various activities, including arms trafficking and drug trade. He pointed out that addressing these issues necessitates a concentrated effort, making it clear that a proactive approach to prevention is essential.The development of the e-CNY has seen impressive progress, with pilot projects initiated in 2019 and later expanded to 26 locations across 17 provincial-level cities and regions, including major metropolitan areas like Beijing, Shanghai, Shenzhen, and Suzhou.Last month another official from the PBOC spoke to the need to make the e-CNY accessible in all retail payment scenarios within China at a trade forum in Beijing. Digital yuan use is also being broadened to facilitate its availability in the special Chinese administrative area of Hong Kong.Proposing two-tier systemZhou advocated for a two-tier system in the operation of e-CNY, a structure already in place. The People’s Bank of China presides over the first tier, responsible for issuance and regulation, while the second tier comprises commercial institutions such as commercial banks, internet platforms, and telecommunications operators.This dual-layered design promotes dynamic evolution within the digital currency landscape, enhancing service quality and fostering innovation through healthy competition. Zhou stressed the importance of exploring cross-border transactions, an area that entails both technological advancements and policy orientation.Hong Kong has actively embraced e-CNY for cross-border payments, advancing into the second phase of technical testing and preparing to incorporate it into its predominantly local payment system.On a related note, Lu Lei, the deputy administrator of the State Administration of Foreign Exchange (SAFE), highlighted the programmable features of CBDCs as tools for enhancing monetary policy effectiveness.While current CBDCs are positioned as M0 currencies, strictly currency in circulation plus commercial bank reserve balances, he proposed that central banks could evolve them into M2 currencies. M2 is a measure of money supply that incorporates checking deposits and other forms of deposits that are readily convertible to cash, alongside cash itself.

Singapore’s Terraform Labs, the company founded by incarcerated crypto entrepreneur Do Kwon, has filed for Chapter 11 bankruptcy protection as a mechanism to shield itself from potential severe penalties in the U.S. Securities and Exchange Commission's (SEC) securities fraud lawsuit.Photo by Melinda Gimpel on UnsplashPursuing an appealThe bankruptcy filing, submitted on Tuesday in the U.S. Bankruptcy Court for the District of Delaware, aims to allow Terraform Labs to pursue an appeal against the SEC's allegations. In the filing, Terraform Labs CEO Chris Amani emphasized the critical nature of the bankruptcy protection for the company's ongoing operations, preservation of value for creditors, including the Terra community, and the pursuit of an appeal against the SEC enforcement action. Amani expressed concerns that, without Chapter 11 protection, the company could face liquidation after the trial, forfeiting its right to appeal and leading to disastrous consequences for its business. Having acted as Terraform’s chief operating officer earlier in 2023, last July Amani was appointed as the firm’s CEO. Protection afforded by Chapter 11The estimated assets and liabilities of Terraform Labs fall between $100 million and $500 million, as disclosed in the firm’s bankruptcy filing earlier this month. Amani highlighted the potential financial strain resulting from a substantial money judgment, indicating that the company might not be able to satisfy such a judgment or post the necessary supersedeas bond for an appeal, a bond that must be provided by a petitioner who attempts to have a judgment set aside, without the protection afforded by Chapter 11. The SEC charged Terraform Labs and former CEO Do Kwon with securities fraud in February 2023, accusing them of orchestrating a "multi-billion dollar crypto asset securities fraud." The Commission claimed the company raised billions from investors through unregistered transactions, offering an interconnected suite of crypto asset securities. Terraform Labs disputes the SEC's summary judgment decision, asserting that the cryptocurrency tokens in question are not securities under the Acts and that the SEC's jurisdiction is not applicable. The potential consequences of liquidation extend beyond the company itself, impacting hundreds of thousands of Luna cryptocurrency holders, the same individuals the SEC purportedly seeks to protect. Luna operates on the Terra blockchain maintained by Terraform Labs. Terraform Labs, known for the algorithmic stablecoin TerraUSD and its sister cryptocurrency Luna, filed for bankruptcy protection in the wake of the infamous collapse of both in May 2022. The SEC's case stems from that $40 billion collapse of TerraUSD and a previous version of Luna, accusing Terraform Labs and Kwon of misleading investors about the stability of TerraUSD. Kwon was arrested in March of last year in Montenegro for using false documents. He is currently detained in Montenegro, following his attempt to travel to Dubai with a fake Costa Rican passport. The Terraform founder is currently awaiting extradition to either the United States or South Korea. Both Do Kwon and Terraform Labs deny committing fraud, with the SEC trial scheduled to commence in New York in late March.