Binance’s Entry Followed by Increased Scrutiny on Foreign Executives in Korean Crypto Firms

A subsidiary company of Tiger Brokers, a Singapore-based online brokerage firm with nine million users, has been awarded a virtual asset trading license in Hong Kong. The subsidiary, YAX (Hong Kong) Limited, has been added to a list of licensed virtual asset trading providers (VATPs) on the website of the local regulator, the Securities and Futures Commission (SFC). Photo by Simon Zhu on UnsplashSeven platforms licensedBack in August, YAX found itself among a list of 11 VATP applicants that had been provided with feedback with regard to issues that needed to be addressed following inspections carried out by the SFC. Evidently, those issues have been resolved given that the company has now been awarded a trading license. YAX is now just one of nine trading platforms that have obtained licenses in the Chinese autonomous territory. These include OSL and HashKey, who were the first entities to be licensed in Hong Kong. HKVAX followed with approval granted in August 2023. Last October, SFC CEO Julia Leung told local news media that the regulator was dealing with 11 applications and that four approvals were imminent. In December, four additional exchanges, namely HKbitEX, Accumulus, DFX Labs and EX.IO, were awarded licenses. Bixin.com, WhaleFin and Matrixport HK are among the eleven applicants that have yet to receive a license. Alongside YAX, Panthertrade (Hong Kong) Limited was issued a license on Jan. 27, meaning that seven platforms have now been licensed. Panthertrade is a subsidiary company of Chinese mobile internet firm Cheetah Mobile.  Crypto trading and custodyOnce launched, YAX intends to extend crypto trading services alongside crypto custody to its clients. The company’s CEO, Kelvin Liu Kai, has said that as it rolls out its service offering, YAX will look to enhance speed trading, focus on transparency and security relative to the trading process and reduce custodial risks.  Tiger Brokers CEO Wu Tianhua has suggested that the virtual asset sector has grown rapidly on a global basis and with that, he sees “immense potential” for further growth. He added:“Cryptocurrencies are a key future investment trend. The establishment of YAX not only demonstrates our confidence in the potential of the market, but also showcases our firm commitment to creating a transparent and secure trading environment.” Swift licensing processThese latest licensing applicant approvals follow confirmation earlier this month that the SFC had extended access to its swift licensing process to all new VATP applicants. The four applicants approved in December had been the first to be put through the process.  In December, Joseph Chan, Acting Secretary for Financial Services and the Treasury (FSTB), confirmed to Hong Kong’s Legislative Council that in addition to the swift licensing process, a consultative panel for licensed trading platforms will be established in early 2025. It emerged in October 2023 that both YAX and Panthertrade were planning on submitting applications for VATP licensing in Hong Kong. With licensing pending, YAX parent company Tiger Brokers partnered with HashKey Exchange in May 2024, in order to launch a virtual asset trading service.  The service was made available to retail investors through the Tiger Trade platform the following month, enabling the platform’s 800,000 users to trade Bitcoin and Ethereum.

CoinFLEX’s Creditors Sue CEO and OPNX in Legal DisputeCreditors of Seychelles-incorporated crypto platform CoinFLEX have taken legal action against its CEO, Mark Lamb, alleging that his involvement in launching the claims trading platform OPNX violated his fiduciary duties to CoinFLEX.Photo by Sasun Bughdaryan on UnsplashDissatisfied CoinFLEX creditorsAccording to the civil action, which was filed in a Hong Kong court earlier this month, they view OPNX as a competing business to CoinFLEX. The lawsuit also implicates CoinFLEX investor Roger Ver.Lamb joined forces with Su Zhu and Kyle Davies, the founders of the now-defunct Singaporean crypto hedge fund Three Arrows Capital (3AC), to introduce a platform for trading bankruptcy claims, initially named GTX (later rebranded as OPNX). CoinFLEX co-founder Sudhu Arumugam also backed the project, with Leslie Lamb, Mark Lamb’s wife, installed as CEO.Lamb and CoinFLEX defended the project, claiming it would enhance transparency in financial markets and benefit CoinFLEX creditors. However, creditors argue that Lamb’s actions indicate a strategic move to distance himself and his associates from CoinFLEX. With that, they’re seeking to prevent him from representing CoinFLEX in the future.Complaint detailsThe creditors of CoinFLEX assert that OPNX was not authorized by CoinFLEX’s board or creditors and that Mark Lamb independently appropriated CoinFLEX’s intellectual property, technology, customer base, and employees to create the claims exchange.They accuse Lamb of entering into a harmful licensing and purchase agreement with OPNX’s parent companies, Open Technologies Holding LTD and Open Technology Markets LTD. Through their lawsuit, the creditors are aiming to nullify these agreements and place OPNX’s assets and profits into a trust.OPNX’s strugglesOPNX has faced difficulties from the point at which it was launched. While Zhu and Davies were once leading figures in the digital assets space, their reputations have been severely tarnished due to the manner of the 3AC collapse and its profound impact on the broader crypto market.In April the platform confirmed backing from various venture capital (VC) entities only for many of the VCs to turn around and deny any such involvement with the project. Having issued an investor and marketplace alert in relation to the firm in April, a short time later the Virtual Asset Regulatory Authority (VARA) in Dubai issued a formal reprimand to the business' founders.VARA followed up in August, applying a $2.7 million fine. OPNX had entered a bid for troubled Singaporean crypto lender Hodlnaut as part of that business restructuring process. The offer was turned down on the basis that the deal involved OPNX’s native OX token, which was deemed to be far too illiquid. A short time later, the OX unit price plummeted.Zhu was arrested in Singapore last month in connection with non-compliance related to 3AC’s bankruptcy, while Davies’ whereabouts remain undisclosed.CoinFLEX’s creditors also accuse Lamb of reaching a settlement agreement with Roger Ver, known as “Bitcoin Jesus.” Ver was one of CoinFLEX’s initial investors but later became entangled in a dispute over an $84 million debt he allegedly incurred on the platform due to market volatility. The lawsuit seeks to recover any benefits Ver received from the settlement.On X, a user called @CoinFLEXReal suggested that it has uncovered evidence that Lamb, Zhu, and Davies “used creditor assets as their personal piggy bank.”

Genesis Ordered to Comply with Subpoena in Terraform Labs CaseGenesis, the troubled crypto lender and trading company, has been issued a compelling directive by a New York court. The court has mandated Genesis to comply with a subpoena within five days, following a failure to respond to previous requests by the October 9 deadline, relative to a case involving Singapore’s Terraform Labs.Photo by Michael Discenza on UnsplashTerraUSD collapse falloutThese requests are related to the 2022 collapse of the TerraUSD stablecoin, a cryptocurrency which was supposed to maintain a peg to the US dollar’s value until it lost that peg and collapsed. At the time, the demise of TerraUSD reverberated throughout the cryptocurrency markets.In response to this collapse, the US Securities and Exchange Commission (SEC) initiated a legal action against Terraform Labs, the company responsible for the token, and its co-founder Do Kwon, alleging that investors had been misled. Both Do Kwon and Terraform subsequently tried unsuccessfully to have the case dismissed.As part of the progression of this case, the SEC sought to question Do Kwon and gain access to company records held by the Singapore-headquartered firm. The defendants were ultimately unsuccessful in arguing their case in that instance on jurisdictional grounds.Failure to respondJudge Jed Rakoff, in a court order filed on Friday, highlighted Genesis’s non-compliance with the subpoenas, stating:“As of today, the Genesis Entities have failed to produce any documents in response to the Subpoenas.”These subpoenas were issued by the defendants to seek specific information from Genesis Global Capital, Genesis Global Holdco, and Genesis Global Trading on September 12.The court order does not specify the nature of the information sought. It is worth noting that Genesis extended substantial loans to the now-defunct hedge fund Three Arrows Capital (3AC), which was heavily exposed to the TerraUSD stablecoin. In January 2023, three Genesis entities filed for bankruptcy, and its trading arm ceased its US spot market operations in September.In addition to the challenge posed by Genesis’ non-compliance, Judge Rakoff is also wrestling with obtaining information from Do Kwon in connection with the legal proceedings. Kwon’s legal representatives have argued that he cannot physically come to the US as he is serving a jail sentence in Montenegro for possession of a counterfeit passport.However, Judge Rakoff has expressed his determination to ensure Kwon’s availability for cross-questioning and stated that Kwon will not be allowed to provide any declarations in the case without being subject to cross-examination.Citadel under scrutinyIn a related development, it emerged last week that Terraform Labs is accusing American market maker Citadel Securities of having sabotaged its TerraUSD stablecoin. As part of the Singaporean company’s pursuit of justice, it has called upon the United States District Court in the Southern District of Florida to force Citadel to furnish specific documents that relate to their trading activities during the period within which TerraUSD collapsed.Should it fail in that endeavor, Terraform has said that it will look to have the matter heard in Judge Rakoff’s court in New York.This legal development concerning Genesis marks a crucial juncture in the ongoing investigation into the TerraUSD stablecoin’s collapse and the actions of the entities involved, with Genesis now facing increased pressure to cooperate fully with the legal process.