No Turkish Delight for Crypto Exchange CEO Sentenced to 11,196 Years

Binance APAC Head Urges the Korean FIU to Approve Gopax’s Exec ChangesIn a recent interview with Yonhap News, Leon Sing Foong, Binance’s head of Asia-Pacific operations, emphasized the importance of the Korean financial regulator approving the change of executives at Gopax, a Korean crypto exchange.©Pexels/freestocks.orgDelayed staked asset returnFoong’s comments came in the face of mounting worries regarding the delayed repayment of assets stored in Gopax’s staking service GOFi. He explained that 25% of the assets staked in GOFi have been repaid, and the remaining assets will be refunded after approval of the Financial Intelligence Unit (FIU) of the Korean Financial Services Commission (FSC) is secured.Foong was appointed as the new CEO of Gopax last February, with Binance becoming the largest shareholder of Gopax’s operator Streami. In March, Gopax submitted an application to the FIU to inform them of the executive changes, as required by Korean law.However, the application review has been delayed amid concerns about the unclear location of Binance’s headquarters and its regulatory challenges in the US.Controlling staking servicesThe Binance executive believes Gopax’s staking service should be controlled by the exchange itself, rather than a third party. The current GOFi issue emerged due to Gopax’s management of its custody assets through crypto lender Genesis, which ceased trading following the FTX bankruptcy. Foong stated that Binance will require Gopax to maintain reserves of over 100% and eventually phase out the third-party-based service.According to Foong, Gopax’s business model will remain unchanged, and the exchange will work alongside Binance to bolster liquidity within the local market while enhancing both infrastructure and security measures. He considers internal risk management as Gopax’s top priority.Risk assessmentFoong also expressed confidence in the upcoming risk assessment of Gopax by Jeonbuk Bank, recently requested by the Korean Financial Supervisory Service (FSS). He said that the exchange is healthy, and that Binance has high-level anti-money-laundering (AML) capabilities.Korean law mandates crypto exchanges supporting Korean won trading have real-name bank accounts, and Gopax receives such accounts from its partner Jeonbuk Bank.Binance’s Asian expansionBinance’s endeavor to enter the Korean market is part of its strategy to expand its presence in Asia. It was previously reported that Binance Japan will start its operations around June this year.

Hong Kong and Israel Collaborate to Expand CBDC Access Beyond BanksIn a collaborative effort, the Hong Kong Monetary Authority (HKMA), the Bank of Israel (BoI), and the Bank of International Settlements (BIS) Innovation Hub have jointly released a comprehensive report on Project Sela, a central bank digital currency (CBDC) initiative.Photo by POURIA 🦋 on UnsplashBroadening the role of intermediariesThe report was published to the BIS website on Tuesday. In keeping with the trend of many CBDC projects, Project Sela is characterized by a robust public-private partnership. However, its particular focus lies in broadening the spectrum of intermediaries, aiming to offer retail CBDC services through a more diverse array of service providers, thereby reducing dependency on traditional banks and major payment providers.Andrew Abir, Deputy Governor of the Bank of Israel, emphasized the importance of fostering a dynamic and open ecosystem with a wide variety of service providers. He stated:“Competition and innovation require a flourishing and open ecosystem with many different types of service providers. This was our initial goal in Project Sela as a proof-of-concept, and the project proved the feasibility of the model we had in mind.”Involving retail banksIn a previous model explored through Hong Kong’s Project Aurum, retail banks were entrusted with customer-facing tasks while maintaining the central bank’s operation of the wholesale ledger for the eHKD. In contrast, Project Sela introduces a novel approach where the central bank operates the retail ledger — a model akin to Israel’s digital shekel.The primary actors in Project Sela, known as Access Enablers (AEs), notably do not have control over CBDC balances, distinguishing them from conventional payment providers. Moreover, AEs are not required to maintain liquidity to support CBDC services. Their role encompasses facilitating user onboarding and CBDC access, fulfilling know-your-customer (KYC) and compliance obligations, and routing payments. The role of banks and other “funding institutions” primarily revolves around enabling the conversion of cash and deposits into CBDC.The rationale behind this approach is rooted in the emergence of technological advancements in open banking and DeFi, which have demonstrated the potential to disentangle financial services by granting users greater access to their financial data and control over their own funds.Enabling participation among the unbankedProject Sela envisions the unbanked population utilizing ATMs to convert cash into CBDC. A similar approach has recently been taken by the Chinese authorities. In the resort city of Sanya, authorities have introduced e-CNY ATMs in order to enable e-CNY access for foreign tourists.However, it is noteworthy that in many countries, the primary function of ATMs is to dispense cash rather than accept it. Consequently, the inclusion of AEs could pose challenges to traditional banking institutions, as CBDC adoption could potentially impact bank deposits.Privacy and cybersecurity considerations are implicated within Project Sela. As the central bank operates the retail ledger, ensuring the confidentiality of personal information becomes imperative. To safeguard privacy, AEs employ a hashing mechanism to obfuscate personal identifiers, although the report does not delve into the subject in detail.While Bank of Israel Governor Amir Yaron admitted that a CBDC can never be anonymous, he claimed that “if we choose to issue a digital cash shekel, it will provide at least as much privacy as other digital means of payment.”

Growing Concerns about Single Crypto Exchange Listings in KoreaAccording to Yonhap Infomax, there is increasing concern about single crypto exchange listings in the Korean market, following the recent arrest of two former Coinone employees.©Pexels/RODNAE ProductionsCrypto listing briberyThe individuals were detained by the Seoul prosecution for allegedly accepting about 3 billion KRW (equivalent to over $2.2 million) in bribes to list a certain cryptocurrency on the exchange.Prosecutors are investigating if these suspects were also involved in the listing of the Puriever token, which is reportedly connected to the kidnapping and murder of a woman in her forties in Gangnam, Seoul.Single exchange-listed cryptosA recent report by the Financial Services Commission (FSC) revealed that 389 cryptocurrencies were listed on a single Korean exchange in the second half of last year, a decrease from the previous year’s 403. Despite the decrease, the trend of single exchange listings continued. Exchanges often exclusively list specific cryptocurrencies to gain a competitive edge, as investors typically prefer larger exchanges with greater liquidity.However, these cryptocurrencies may lack proper review and management and are often highly volatile. The FSC report showed that 34% of cryptocurrencies listed on a single exchange had a market cap of less than 100 million KRW (~$76,000). The Financial Intelligence Unit also warned investors about price fluctuations and liquidity shortages.High volatile cryptocurrencies are attractive to exchanges, as they can lead to increased transaction fee profits.Transparent listingTo address this issue, experts advocate for a transparent listing process.One lawyer in the crypto industry noted that there is a global trend of regulating cryptocurrencies as securities, and if relevant bills pass in Korea, their issuance and disclosure will be regulated. Clear guidelines on disclosures could resolve the issues of single crypto exchange listings, the legal advisor added.Another industry insider has called for investor caution, stressing the need to consider the potential delisting of these crypto assets.