Sony Network Communications and Startale Labs to Launch Joint Blockchain Venture

Do Kwon, a South Korean national and the central figure in the 2022 collapse of the Terra blockchain ecosystem, was sentenced to 15 years in prison on Dec. 11, capping a federal case that exposed a multibillion-dollar scheme built on false promises and secret market manipulation. According to a U.S. Department of Justice press release, District Judge Paul A. Engelmayer handed down the sentence in Manhattan federal court, finding that the 34-year-old orchestrated a scheme that inflicted substantial losses on both retail and institutional investors.Photo by Tingey Injury Law Firm on Unsplash"This was a fraud on an epic, generational scale. In the history of federal prosecutions, there are few frauds that have caused as much harm as you have, Mr. Kwon," Engelmayer said, according to Reuters. Kwon, who was extradited to the U.S. in December 2024 following his arrest in Montenegro, pleaded guilty in August. Addressing the court, he acknowledged the devastation caused by the collapse. "All of their stories were harrowing and reminded me again of the great losses that I’ve caused. I want to tell these victims that I am sorry," Kwon said. A house of cardsAccording to court filings, Kwon’s deception ran from 2018 through 2022, misleading investors regarding the stability of the algorithmic stablecoin TerraUSD (UST), the LUNA token, and the independence of the Luna Foundation Guard. Prosecutors outlined a pattern of fabrication across Terraform’s products. When UST lost its $1 peg in May 2021, Kwon claimed an automated "Terra Protocol" restored balance. In reality, investigators found the company secretly utilized a high-frequency trading firm to prop up the price, creating a "false impression" of the system’s resilience. The fraud extended to Terraform’s partnerships and applications. Investigators said Kwon lied about the South Korean payments platform Chai, claiming its transactions were settled on the Terra blockchain. Instead, Chai used traditional payment networks, with Terraform simply copying data to the blockchain to feign integration. Similarly, Kwon allegedly manipulated the Mirror Protocol, a platform for synthetic stock trading. While touting it as decentralized, prosecutors said he used bots, funded by stablecoins he created, to inflate volume and manipulate asset prices. The collapse and captureBy spring 2022, the ecosystem’s value exceeded $50 billion. However, when UST broke its peg again in May 2022, Terraform could not artificially restore it. The resulting crash erased at least $40 billion in value and triggered a contagion across digital-asset markets. While Kwon publicly claimed cooperation with authorities during the fallout, prosecutors introduced recordings suggesting he privately explored seeking political protection to avoid accountability. He was eventually arrested in Montenegro in March 2023 for traveling on a fraudulent passport. In addition to the prison term, Judge Engelmayer ordered Kwon to forfeit over $19 million, including interests in Terraform and its digital assets. The case was investigated by the Federal Bureau of Investigation (FBI) with assistance from Montenegrin and South Korean authorities. The Securities and Exchange Commission (SEC) has filed a separate civil action. Global crackdown widensWhile the U.S. concludes the Kwon case, scrutiny of the crypto sector is intensifying abroad. DL News, citing the Belarusian outlet Onliner, reported that Belarusian authorities have blocked access to digital asset trading platforms Bybit, Bitget, and OKX. The Ministry of Information cited the Mass Media Act for the decision, though KuCoin and Binance remain accessible. The step contrasts with President Alexander Lukashenko’s earlier support for developing a national crypto reserve and mining sector. Meanwhile, the Belarusian arm of Russia’s Sputnik reported that State Control Committee chairman Vasily Gerasimov recently put in place a record system identifying wallets authorities suspect are used for criminal money laundering. 

Korea’s Internet Agency Encourages More Blockchain Tech Adoption to Overcome Crypto WinterVirtual asset and blockchain technology needs to be more broadly adopted to overcome crypto winter, an official from the Korea Internet and Security Agency (KISA) said at the 2023 Blockchain Meetup Conference on Wednesday.©Pexels/Helena LopesUser-friendly apps and regulatory supportPark Sang-hwan, the leader of the blockchain technology promotion group at KISA, encouraged the blockchain industry to develop user-friendly applications to give positive impressions, adding that blockchain-based apps should be faster and efficient to meet users’ expectations.He also said the blockchain industry needs regulatory support, explaining that regulatory issues can hinder the growth of the industry’s growth.KISA’s support for blockchain industryAccording to Park, the quasi-government internet agency introduced a business quality control system to offer advice on legal, technological, and business issues to companies, as well as to provide them with business problem-solving support. KISA will continue driving the development of key blockchain technologies, create new business plans for Web 3.0, and devise a mid- to long-term roadmap for research and development, he said.Blockchain projects in KoreaDuring his speech at the conference, Park presented several KISA-led public sector projects that will unfold this year, as reported by the Korean economics newspaper Hankyung. They include blockchain-based online voting systems, the establishment of digitally formed national licenses, and the verification of personal identification.Endeavors in the private sector were also revealed, including NFT-based concert tickets, oil waste disposal systems, and identification using soulbound tokens.

Zodia Custody Launches Crypto Custodian Service in DubaiZodia Custody, a subsidiary of British multinational banking services firm Standard Chartered, has entered the Middle Eastern market, bringing its crypto custody service to Dubai.In a tweet on Thursday, the start-up announced that its parent company Standard Chartered has signed a memorandum of understanding (MoU) with the Dubai International Financial Centre (DIFC) to launch digital asset custody services in Dubai, powered by Zodia Custody.The move will only go ahead once it has been approved by Dubai’s regulator, the Virtual Assets Regulatory Authority (VARA). At the MoU signing ceremony, Standard Chartered CEO Bill Winters stated: “We see digital assets as an important part of the future of financial services and we are committed to investing in the infrastructure and talent necessary to be a leader in this space.”“The UAE [United Arab Emirates] has a well-balanced approach to digital asset adoption and financial regulation, making it an ideal first market for us to launch our digital asset custody proposition,” Winters added.With 54 years in the financial services arena, the UAE is already home to Standard Chartered’s operations in the Middle East and North Africa (MENA) region.SBI joint ventureIts London-based subsidiary has been busy. In addition to this expansion into the MENA region, in February the fledgling company entered the Japanese market. It achieved that by partnering with Japanese financial services conglomerate, SBI Holdings. The Japanese joint venture company is 51% owned by SBI, while Zodia holds the remaining 49% minority stake. At the time, Julian Sawyer, CEO of Zodia Custody, said that “partnering with SBI DAH ensures the joint venture will offer gold-standard crypto asset custody services in Japan.”Capital injectionLast month, SBI Holdings stepped up its association with Zodia Custody by becoming the lead investor in Zodia’s latest funding round. Up until that point, Zodia had been supported largely by Standard Chartered. Northern Trust took a 10% stake with Standard Chartered accounting for the remaining 90% equity stake. Following that most recent funding round, SBI now moves up the rankings to become Zodia’s second largest investor.Zodia was founded in 2020 in tandem with a separately launched trading platform, Zodia Markets. Its objective was to offer a safe, trustworthy platform through which institutional clients could invest in crypto assets. As a UK-based entity, the firm is regulated by the UKs Financial Conduct Authority (FCA).Heightened digital asset developmentAuthorities in Dubai and within the UAE in general have been working hard in recent months with an eye towards making the country, and particularly its Dubai and Abu Dhabi Emirates, a hub for digital asset-related business. Regulators in Dubai, Abu Dhabi, and at a national UAE government level, have been progressing in terms of getting a workable digital assets regulatory framework and licensing regime in place.With the Dubai Fintech Summit having taken place earlier this week, there were further developments still relative to digital asset business in the UAE. On Monday, Coinbase CEO Brian Armstrong was in attendance alongside his executive team. Just like Armstrong, Ripple CEO Brad Garlinghouse was also a keynote speaker at the event. Both complemented the UAE on its regulatory approach to crypto off the back of both of them having been sharply critical of the regulatory approach in the United States. Armstrong indicated that his company is interested in establishing a base in Abu Dhabi while Garlinghouse confirmed that Ripple is opening an office in Dubai.Photo by Aleksandar Pasaric on Pexels