Japan Moves to Allow Startups to Sell Digital Tokens to VC Funds

Mirae Asset Securities Expands Security Token Group with Media CollaboratorsSouth Korean securities firm Mirae Asset Securities announced yesterday the expansion of its security token working group. This development includes the addition of two new media-related companies to the group: Studio Genius, a content production house, and Solaire Partners, a venture capital firm with a specific focus on the media industry. Mirae has chosen to collaborate with these companies to jointly develop security token products centered around Korean films and TV series.Photo by Timothy Ries on UnsplashSynergy between Korean content and financeThe Korean securities company claims that since the Financial Services Commission unveiled regulatory guidelines for security tokens in February, it increased focus on exploring the synergy between Korean content and finance. In support of this, data from the Korea Creative Content Agency indicates that as of 2022, the Korean content market stands as the world’s seventh-largest, experiencing an average annual growth rate of 11%.Studio Genius, established by Yang Woo-suk, the director behind the box office success “The Attorney,” is currently in the process of producing a TV series with a global audience in mind.Meanwhile, Solaire Partners was a key investor in the critically acclaimed movie “Parasite.” This investment company, founded in 2017, is led by Choi Pyung-ho, a seasoned expert in content production. Prior to founding Solaire Partners, Choi held the position at CJ Entertainment (now CJ ENM) as head of its film business.Fractional investment and blockchain techOther participants who are newly joining the group include Treasurer, a luxury goods fractional investment platform, as well as Coinplug and Zkrypto, both technology companies. In collaboration with Treasurer, Mirae intends to discuss the valuation and commercialization of luxury goods, which hold substantial investment potential. Subsequently, they plan to explore various avenues for integrating security tokens into their business strategies.Coinplug is the first company in Korea to commercialize blockchain-based certificates for the financial sector. Positioned as a Web3 technology company, Coinplug boasts a diverse portfolio of blockchain technologies, including decentralized identity (DID), mainnets, wallets, decentralized applications (dApps), and non-fungible tokens (NFTs).Zkrypto stands as a prominent leader in South Korea within the realm of zero-knowledge (ZK) proof technology. This distinction is underscored by its product, which received an innovation award at CES in Las Vegas earlier this year. Mirae holds the belief that ZK-proof technology will play a pivotal role in facilitating enhanced privacy protection and accelerated transaction speeds for security tokens.Another collaborative endeavorIn addition to the aforementioned working group, Mirae is running the Next Finance Initiative, a consortium with the primary goal of broadening the security token ecosystem. Partners in this consortium are the two notable entities: SK Telecom and Hana Financial Group. Mirae will strive to further grow and enhance the reach of this consortium.

HeyBit to Cease Virtual Asset Deposit Services in OctoberSouth Korean centralized finance (CeFi) company HeyBit announced on Monday that it will terminate its virtual asset deposit service, Harvest, on October 2 in line with regulatory guidelines.Photo by Andre Taissin on UnsplashRegulatory limitations“Although we have made efforts to pay promised returns and provide stable digital asset investment products, we have ultimately decided to terminate the Harvest service in accordance with the policy guidelines of regulatory authorities,” the company said in a statement.It further emphasized that the service termination is solely due to regulatory restrictions, rather than questions of financial integrity or credit issues, while also citing its judgment call that running a deposit business is practically impossible at the moment.“Although some customers of other businesses have faced damages due to operational issues, the results of our due diligence report for the second quarter of 2023 were consistent with that of our last four reports, stating that the value of the assets we own exceeds that of deposited assets,” HeyBit said, seemingly referring to the recent class-action lawsuits against the Korean crypto platforms Haru Invest and Delio, who had unexpectedly suspended customer deposits and withdrawals, inciting KRW 50 billion (approximately $39 million at the time of the incident) in damages in the process. The company stressed that it was unrelated to this debacle and was securely storing all customer assets, alleviating potential investor concerns.The company has thus been able to properly handle management operations involving promised returns, additional deposits, and withdrawals for Harvest users up until now.However, it has decided to comply with the Virtual Asset User Protection Act, which is set to take effect next year in Korea. Article 7, Paragraph 2 of this act outlines that virtual asset companies must keep their own virtual assets and customers’ virtual assets separate, and they must own the same quantity and type of virtual assets — including deposited assets — as those that have been entrusted by customers.“We are thus unable to use the assets entrusted to us by our customers as a source of return,” HeyBit said.Planned reboundDespite this setback, the company promised to resume services based on regulatory and policy changes in the future, including revamping virtual asset deposit services.

Jeff “Jihoz” Zirlin, one of the co-founders of Sky Mavis, the Singapore-headquartered development firm behind both Axie Infinity and the Ronin Network, has faced a significant setback as some of his personal crypto wallets have fallen victim to a hack.Photo by GuerrillaBuzz on UnsplashFunds drained through Tornado CashThe hack has resulted in the loss of approximately $9.7 million worth of ether (ETH). The breach, which occurred on Feb. 23, saw two crypto wallet addresses associated with Zirlin compromised. The perpetrator managed to abscond with 3,248 ETH, funneling the stolen funds through Tornado Cash, a privacy-focused Ethereum mixer. The alarm was raised by PeckShield, a blockchain investigation firm, which identified the compromise of a "whale wallet" through the Ronin Bridge. PeckShield attributed the breach to a "wallet compromise," which facilitated unauthorized outbound transfers of funds. PeckShield's investigation revealed that the pilfered 3,248 ETH was initially dispersed across three different wallets before being funneled into Tornado Cash. This service, notorious for its use by hackers seeking to obfuscate the origin and traceability of illicit funds, served as a conduit for the stolen assets. Confirming the attack and remarking on having had a “tough morning,” Zirkin outlined on social media that “the attack is limited to my personal accounts, and has nothing to do with validation or operations of the Ronin chain.” He emphasized the implementation of stringent security protocols across all chain-related activities, seeking to reassure stakeholders of the company’s commitment to safeguarding user assets. Although specific details regarding the breach remain undisclosed, Zirlin's statement suggests a leakage of the private keys associated with his personal wallets, granting unauthorized access to the hacker. Ronin Network securePeckShield’s revelation prompted Aleksander Larsen, co-founder of Ronin Network, to swiftly respond, affirming the robust security measures of the Ronin Bridge. The social media post that Larsen had responded to, which he claimed to have an “extremely misleading title,” was later deleted. Larsen suspected that the breach stemmed from a wallet hack rather than a flaw within the bridge itself. Notably, Ronin had been targeted in a high-profile attack in March 2022, orchestrated by the North Korea-backed Lazarus Group, resulting in a $625 million loss.In response to this previous breach Sky Mavis initiated a comprehensive overhaul of Ronin's core systems to bolster decentralization and mitigate future vulnerabilities. $112M Ripple co-founder hackIn a separate incident, Binance intercepted $4.2 million worth of stolen XRP, part of the $112 million hack targeting Ripple co-founder Chris Larsen's personal wallet on Jan. 31. Unlike the Axie Infinity breach, the perpetrator behind Larsen's hack refrained from leveraging crypto mixer services or decentralized exchanges, enabling Binance to track and immobilize a portion of the illicitly obtained funds. Axie Infinity, heralded as a pioneering "play-to-earn" Web3 game, has emerged as a lucrative platform, enabling players to earn cryptocurrency and trade in-game assets via blockchain technology. Since its inception in 2018, the game has amassed $1.3 billion in revenue, underscoring its prominence within the burgeoning blockchain gaming ecosystem.