Entrepreneurs to Discuss Blockchain Investment Opportunities at Korea Investment Week 2023

Hivemind Capital Partners expands into Hong Kong marketHivemind Capital Partners, a prominent player in the world of Web3 and digital asset investment, has officially unveiled its plans for expanding its operations to Hong Kong.Photo by Chromatograph on UnsplashNew Head of Asia appointmentIn a press release published by the New York-headquartered firm on Tuesday, Hivemind outlined that alongside this significant Asian expansion, the company has appointed Stanley Huo as Head of Asia. Huo is a seasoned investment banker with over 15 years of experience at prestigious institutions like China Renaissance, UBS, Citi and BAML across Asia and Europe.Huo expressed his excitement, stating: “I’m thrilled to be joining Hivemind at such a transformative period. The intersection of traditional finance and burgeoning digital asset technologies in Hong Kong presents unmatched opportunities and I’m looking forward to leading our initiatives in this vibrant ecosystem.”Identifying an opportunityHivemind Capital Partners had nothing but praise for Hong Kong as a significant crypto hub. The company highlighted the distinct advantages that come with operating in the city-state, including a well-established ecosystem that facilitates access to traditional financial infrastructure, capital-raising opportunities and the exploration of blockchain-related innovations.Huo told The Block: “It was very interesting to see that the Hong Kong government welcomes all the Web3 capital and talents… They want to build up a Web3 center.”Matt Zhang, Founder and Managing Partner of Hivemind, is equally enthusiastic about the Hong Kong expansion, stating:“Our expansion into Hong Kong not only represents our firm’s growth, but our commitment to being at the center of financial innovation and technology. With Stanley leading our business in Asia, we are positioned to significantly contribute to, and influence, the evolving narrative of blockchain technology and digital assets in the region.”Zhang is a speaker at Hong Kong Fintech Week later this week, where he will participate in a panel discussion titled “The Future of Stablecoins: Exploring Virtual Asset Payment Infrastructure and the Rise of Non-USD Stablecoin Frameworks.” He founded Hivemind in November 2021, with a view towards deploying capital within verticals such as crypto infrastructure, virtual worlds, programmable money and blockchain protocols.Hivemind has been on a significant growth trajectory, as evidenced by its recent launch of a $1.5 billion investment vehicle, with available funds still waiting to be deployed. Additionally, the company introduced the Liquid Opportunity Fund, a $300 million crypto fund, earlier in the year, securing $60 million for the fund in June.Following a regional trendThe company’s move to Hong Kong aligns with the broader trend of cryptocurrency firms recognizing the region’s potential and considering it for their expansion plans. Notably, Zodia Custody, a digital asset custodian backed by Standard Chartered, recently announced its launch in Hong Kong.While Hong Kong has actively positioned itself as a hub for Web3 companies, boasting recent developments like the introduction of retail trading for licensed crypto exchanges in August, it has also faced challenges. The city recently witnessed the largest Ponzi scheme in its history, involving the embezzlement of approximately $166 million from JPEX crypto exchange users. The investigation into this incident is still ongoing.

On Monday, Hong Kong's spot Bitcoin exchange-traded funds (ETFs) marked their first cumulative daily Bitcoin outflows, with the sole occurrence arising from China Asset Management's (ChinaAMC) ETF. ChinaAMC's spot Bitcoin ETF witnessed an outflow of 75.36 Bitcoin, while the other two ETFs reported zero inflows. This development comes after these ETFs debuted on the Hong Kong Stock Exchange on April 30.Photo by Kanchanara on UnsplashInsights into daily trading dynamics and metricsOn their inaugural trading day, the three funds garnered an inflow of 3,910 BTC, as per data from SoSo Value. However, it's important to note that shares acquired through in-kind subscriptions of physical Bitcoin are not counted as U.S. dollar-based cash flows in SoSo Value's daily net inflow statistics. Instead, SoSo Value employs the Bitcoin-inflow metric, measuring the actual flow of Bitcoin into or out of all ETFs on a given trading day. As of Monday, the combined holdings of the three ETFs stood at approximately 4,150 Bitcoin, with total net assets reaching $266.8 million from $247.7 million on the debut day, according to SoSo Value data. Farside Investors' data corroborated similar findings, indicating an outflow of $4.9 million from ChinaAMC's spot Bitcoin ETF on Monday, while the other two ETFs saw no inflows. Trading volume and market activityDespite the outflows, the total trading volume for the three ETFs surged to $8.6 million on Monday, up from $8.01 million the previous Friday, according to SoSo Value data. Meanwhile, in contrast, spot Bitcoin ETFs in the United States witnessed a net inflow of $217.06 million on the same day, with Grayscale's GBTC fund registering its second consecutive daily net inflow.

Hacking Attempts on Upbit Reach 160,000 in First Half of the YearThere have been approximately 160,000 hacking attempts on Upbit, Korea’s largest cryptocurrency exchange, in the first half of this year alone, according to a report submitted by Upbit’s operator Dunamu to lawmaker Park Sung-joong of the National Assembly’s Science, ICT, Broadcasting, and Communications Committee.“Cryptocurrency hacking incidents are increasing both domestically and internationally, and hacking attacks on exchanges such as Upbit, which have daily trading volumes exceeding KRW 2 trillion, are a serious issue,” Park said.Photo by Clint Patterson on UnsplashAn uptick in hacking attemptsThe data revealed that the number of cyber breach attempts in the first half of the year totaled 159,061–2.17 times higher than the number of attempts in the first half of last year, which stood at 73,249.Hacking attempts on Upbit have been steadily increasing in recent years, from 8,356 in the second half of 2020 to 34,687 and 63,912 in the first and second half of 2021, respectively. In the first half of last year, there were 73,249, and 87,242 in the second half. Notably, the exchange suffered losses of approximately KRW 58 billion (approximately $43 million) from a hacking attack in 2019.Ramping up securitySubsequently, Dunamu has taken action to enhance security by managing over 70% of its assets in cold wallets and operating hot wallets in a distributed structure instead of a singular one. Hot wallets refer to online crypto wallets, whereas cold wallets are crypto wallets that are offline and disconnected from the internet. Hot wallets offer the advantage of direct deposits and withdrawals, but they have weaker security levels — most known exchange hacks have thus occurred through this medium. On the other hand, cold wallets store private keys on offline sources like external hard drives and portable storage devices, making real-time trading difficult but providing better security and stability.“We have taken various preventive measures since the hacking incident in 2019, such as operating hot wallets in a distributed manner. There have not been any successful cyber breaches to date,” Upbit said.Regarding the role of the Ministry of Science and ICT in managing and overseeing crypto hacking incidents, Park pointed out that this still remains ambiguous. “The Ministry should conduct large-scale white-hat hacking tests and security assessments for crypto exchanges that are frequently faced with hacking attempts, as well as for hospitals and subway systems that manage large amounts of personal information,” he said.