Huobi Anticipates Break-Even in Q3 Following Consecutive Losses

Korea’s Legislative Research Body Suggests Expanding Blind Trust System to Include CryptoThe National Assembly Research Service (NARS) of South Korea last Friday issued a report emphasizing the need to broaden the scope of the country’s blind trust system for public officials. Currently, this system primarily covers traditional stocks, but the report highlights the necessity of extending its coverage to include cryptocurrencies.Photo by O-seop Sim on PexelsPublic Service Ethics ActUnder the existing Public Service Ethics Act, public officials holding a rank of 4 or higher within the finance department of the Ministry of Economy and Finance and the Financial Services Commission are mandated to either divest themselves of stocks linked to their official duties and responsibilities or transfer them into a blind trust if the total value of these stocks exceeds KRW 30 million (about $23,000).Blind trustA blind trust is a mechanism through which a public official transfers their stock holdings to a trustee. Subsequently, the trustee handles these entrusted stocks by exchanging them for other assets and overseeing their management, administration, and disposition. Importantly, the original owner of the stock, who is the public official, is barred from participating in these aspects of the trust and is also kept uninformed about the trust property’s status or details.Debate over expansionThe current policy confines the blind trust framework exclusively to stocks. Nevertheless, there is an ongoing debate advocating for the inclusion of other assets, such as virtual assets and real estate, within its scope. The rationale behind this argument is that these types of assets can also potentially give rise to conflicts of interest. However, counterarguments have been raised, expressing concerns that extending the blind trust to these assets could excessively limit the property rights of public officials. Consequently, as of now, this broader application has not been implemented.Comparison with the USThe Korean blind trust system was inspired by the United States’ Ethics in Government Act of 1978, which does not limit the types of assets that can be included in a blind trust. In the US, a blind trust can encompass not only stocks but also bonds, mutual funds, virtual assets, and real estate. In light of this, the report recommends the expansion of the blind trust system to encompass virtual assets and real estate. This step is proposed to prevent conflicts of interest among public officials pertaining to a wider array of asset types.Enhancing trustee discretionMeanwhile, NARS also argued for broadening the trustee’s discretion in trust management to render the system more reasonable. This stems from the concern that the existing uniform property sale approach could lead public servants to incur losses. NARS has proposed potential solutions, such as extending the time limit for property sales or mandating the sale of only a portion of the assets, as viable options to address this issue.

3AC liquidators estimate 46% recovery while BVI court freezes $1BThe joint liquidators of the now-defunct Singaporean crypto hedge fund Three Arrows Capital (3AC) have provided creditors with an estimated 45.74% recovery rate for their claims in the bankrupt estate. Meanwhile, in parallel proceedings in the British Virgin Islands (BVI), a court has frozen $1 billion of founders’ assets.According to The Block, the details were disclosed in a December report to creditors by joint liquidators Russell Crumpler and Christopher Farmer of Teneo, the firm appointed to oversee the liquidation of the failed business.$1.16B in assetsAs of Dec. 18, the estimated value of 3AC’s assets was reported to be $1.16 billion, while claims totaling $2.7 billion are expected to be recognized for distribution. The liquidators highlighted that settlements in litigation against various parties, including DCG, Genesis and BlockFi, increased reported assets by an estimated $292 million. It’s important to note that the BlockFi settlement is still pending approval.A total of 154 claims, valued at $3.4 billion, were filed against the 3AC estate. The report indicates that $200 million of claims were not admitted for distribution, and $322 million in claims have either been rejected or are expected to be rejected. Additionally, $76 million in claims are currently under dispute. The report reveals that initial distributions to creditors are being planned for the first quarter of the upcoming year.Illiquid tokensThe breakdown of assets reveals that a large majority are illiquid tokens, subject to vesting periods, comprising 82% of the total. Only 6% of the portfolio is liquid, while equity and investments account for 6.9% and 4.8% is in cash. These illiquid tokens, totaling $563 million at current prices, consist of 13 different tokens with vesting schedules unlocking assets over the next three years, reaching $200 million by the end of 2024.To date, the liquidators have staked some of these tokens, resulting in $5.4 million in staking rewards. Liquidation efforts, including the sale of $34.5 million worth of liquid tokens and $15 million in NFTs, along with other asset sales, have generated a total of $66 million.Photo by Kemp Fuller on UnsplashFrozen assetsIn a related development, Bloomberg reported on Thursday that a British Virgin Islands court has frozen assets totaling $1.1 billion belonging to 3AC co-founders Su Zhu and Kyle Davies, along with Davies’ wife Kelly Chen. The liquidators filed a claim for insolvent trading against the founders for $1.078 billion, with additional claims against Davies for $66 million and Chen for $4.6 million.Teneo outlined the rationale behind the move in the following statement it made to Decrypt:“The worldwide freezing order has been sought in connection with claims that are being pursued by the liquidators that allege, amongst other things, that the Founders should be held responsible for causing 3AC’s position to deteriorate by an amount that is equivalent to the value of the freezing orders sought.”Su Zhu, who was under house arrest for the last few weeks, became free on Dec. 20. Zhu had been arrested in Singapore on Sept. 29 and sentenced to four months imprisonment, serving two-thirds of his sentence under house arrest.Throughout the bankruptcy proceedings, legal fees have accumulated to $49.7 million while the report suggests ongoing efforts to maximize creditor recovery.

Asian Market Surge for XRP Amid Broader Market ImplicationsXRP, the cryptocurrency and native token used by real time gross settlement system, Ripple, has seen renewed activity in recent weeks in terms of trading volume. That trading volume appears to be more pronounced in Asian markets such as South Korea.©Pexels/RODNAE ProductionsThe XRP token has traded up 22% over the course of the past seven days, with a current unit price of $0.54. Trading volume has surged on South Korean exchanges such as Bithumb UpBit and Korbit where volume spiked 18%, 37% and 50% respectively over the past 24 hours. This trading activity is irregular as ordinarily the trading volume of Bitcoin and ether would account for the vast bulk of trading on the three leading Korean exchanges.Speculative interestXRP has under-performed in recent years and at the heart of its difficulties has been a multi-year legal battle with the Securities and Exchange Commission (SEC) in the United States. In its complaint, the SEC has claimed that XRP is an unregistered security. Speculation in recent weeks suggests that this highly litigated battle may be drawing to a conclusion. Many commentators have suggested that either a deal will be struck or the court could soon decide to rule on the matter.During the 2017 bull market, the token reached the heady heights of a $3.40 unit price. That’s a target that the cryptocurrency has never been able to reach ever since. During the last bull market, it rose to around $1.76 for a short time in April 2021. There’s little doubt but the regulatory cloud hanging over it has suppressed the price. Much depends on the outcome of this lawsuit, not just for XRP but for crypto as a whole.Another notion driving speculative interest is the idea that the Commodity Futures Trading Commission (CFTC) may classify XRP as a commodity. That line of thought is more recent and follows the CFTC classifying a number of cryptocurrencies as commodities in its lawsuit against global crypto exchange Binance. In follow up comments earlier this week, CFTC Chair Roistin Behnam reiterated the claim.The very fact that the CFTC has made this claim is significant in terms of the case being pursued by the SEC, potentially weakening the SECs case. Lawyers for Ripple have made the court aware of the CFTCs claims.Crypto moving forwardCrypto traders in South Korea have been notorious in the past for pursuing speculative trends within the industry with the Kimchi Premium on Bitcoin back in the day as a stand out example. Whether speculative or not, the outcome for XRP, Ripple and the broader cryptocurrency space relative to the cryptocurrency’s regulatory status will be significant.A positive result will not just be a fillip for XRP, Ripple and Asian and other crypto traders who have speculated on such an outcome. It will also serve to provide a level of regulatory protection for all other crypto projects within the United States. A negative outcome to the lawsuit will not be ideal for XRP, Ripple and US-based crypto projects. However, Ripple CEO Brad Garlinghouse has said in the past that if innovation is driven overseas, Ripple will focus on developing its product overseas.In an interview this week Ripple President Monica Long suggested that over and above the lawsuit, crypto innovation is generally being pushed outside of the United States. Long cites Asia as taking the lead on “thoughtful crypto policy”. On that basis, it’s likely that one way or another crypto moves forward and maybe South Korean speculators will be proven right regardless of the outcome of the XRP..