Hong Kong and Saudi Arabia Collaborate on Tokenization and Payments

Sun Flags Unjust Token Profits of Huobi Founder’s BrotherJustin Sun, Founder of the Tron blockchain and stakeholder in Seychelles-based global crypto exchange Huobi, has stated that the younger brother of the founder of the exchange, Li Wei, has received millions of Huobi tokens ($HT) when he shouldn’t have.Taking to Twitter, Sun wrote:“Li Lin’s younger brother Li Wei has repeatedly acquired a large amount of zero-cost HT through abnormal means. He has sold it on the Huobi platform many times in history, and has withdrawn huge amounts of cash”.Negotiating a refund and token burnSun went on to outline the action that he is in favor of taking in unison with decisions taken by the Huobi Global Advisory Committee (HGAC). “In order to protect people’s interests, the [HGAC] and the HT DAO community decided to recover and destroy the HT obtained by Li Wei at zero cost,” he wrote. “The HT destruction will be announced in the HT community. Such behavior will not be condoned,” he added.Sun complained that not only were the tokens wrongly allocated to Li Wei, he had been dumping the tokens on the market, selling them off for fiat money. In addition to the tokens being burnt, Sun says that he alongside the HGAC will “negotiate a refund” by engaging directly with Li Wei relative to the fiat money that he has already extracted through selling off the token.The Tron founder added that he doesn’t think it equitable that Wei should benefit from the token allocation as he hasn’t made any contribution to the Huobi community, stating that “fairness and the importance of rewarding those who genuinely contribute to the growth and development of HT DAO” are important.Double standardsSome in the crypto community would call double standards on Sun’s claims of a lack of fairness. At the time of the collapse of the FTX exchange in November of last year, Sun offered to help, collaborating with FTX’s Sam Bankman Fried to allow assets related to Sun’s crypto projects (TRX, BTT, JST, SUN, and HT) held by FTX customers on the exchange to be traded out of the exchange into external wallets.Trading in these assets recommenced for a time, with the price within the exchange being exorbitant relative to the regular market price outside of FTX. Many FTX customers ended up buying these tokens at excessive prices, without being able to extract them from the exchange like Sun had promised. To cap it off, those customers then had the newly installed FTX Debtor under the guidance of John J. Ray III, record their loss at the time the exchange officially went bankrupt at the normal market price for these tokens.Although originally a China-based exchange, Huobi moved out of the Chinese market due to adverse regulation, re-establishing itself in the Seychelles. The firm maintains offices in South Korea, the United States, Japan, and Hong Kong, where it has had a listing on the Hong Kong Stock Exchange since 2018.The $HT token has proven to be very volatile both in intraday trading on Tuesday and over the course of the past seven days. In both instances, it has hit high points in excess of $3.00 and low points of $2.70. At the time of publication, the token was trading at $2.90.Photo by Ant Rozetsky on Unsplash

U.S. regulator, the Commodity Futures Trading Commission (CFTC), has fined Seychelles-headquartered crypto prime brokerage Falcon Labs as part of an overall settlement with the company.  The CFTC had found that the company had operated as an unregistered futures commission merchant (FCM) and furthermore, that it had enabled access to digital asset exchanges without the requisite registration.Photo by Joshua Hoehne on UnsplashSettlement termsIn a press release published to its website on May 13, the CFTC set out the nature of its settlement with Falcon Labs. The parties have agreed that Falcon Labs must discontinue its activities in acting as an unregistered FCM, with particular emphasis on it having provided U.S. individuals with access to digital asset derivatives trading.  Furthermore a fine of $1,179,008 has been applied in disgorgement and in addition, Falcon will have to pay a civil monetary penalty of $589,504. These penalties have been significantly reduced by comparison with the CFTCs original ask, on the basis that Falcon Labs cooperated fully with the CFTC’s Division of Enforcement over the course of the regulator’s investigative process into the activities of the company. In its statement the regulator set out its intent relative to enforcement going forward. Ian McGinley, the CFTC’s Director of Enforcement, stated:”The CFTC is taking the fight one step further by, for the first time, charging an intermediary that inappropriately facilitated access to those exchanges. Today’s action highlights that the CFTC will not hesitate to charge any entities—exchanges or intermediaries—who are providing customers access to digital asset products and services that require registration but have failed to appropriately register.” McGinley added that “the CFTC’s enforcement program has made clear it will not tolerate digital asset exchanges that fail to register with the CFTC or comply with the agency’s rules that maintain integrity in the derivatives markets.” No admission of guiltIn responding to the CFTCs original complaint, Falcon Labs tried to up the ante in terms of compliance. It moved to improve customer identification controls. As a consequence of its market position as a trading intermediary Falcon Labs enabled customer trading on a number of digital asset exchange platforms.  That activity included facilitating U.S.-based institutional customers relative to crypto derivatives trading. It allowed its own account with various digital asset trading platforms to be used, through a system of sub-accounts, by its customers, oftentimes without adequate customer information having been sought. In reaching this settlement with the CFTC Falcon Labs has not made any admission of guilt relative to the regulator’s findings. Alongside paying the agreed upon fines, it will voluntarily agree to adhere to the implementation of improved controls and to withhold its services from user groups that are deemed to be restricted, including all U.S. nationals. Taking to the X social media platform to comment on the matter, Mike Sellig, a partner at New York-based law firm Willkie Farr & Gallagher, claimed that the settlement demonstrated that the CFTC was following in the footsteps of the Securities and Exchange Commission (SEC), establishing “a body of widely applicable precedent.”

Ripple Collaborates with Hong Kong Regulator in RWA TokenizationIn a demonstration of an extended use case, Ripple, the real-time gross settlement system, currency exchange, and remittance network, has announced that it has been selected by the Hong Kong Monetary Authority (HKMA) to showcase a real world asset (RWA) tokenization solution.Photo by Redd F on UnsplashReal world asset (RWA) tokenizationIn a press release published on Thursday, the San Francisco-based firm outlined that the objective of its participation in the HKMAs inaugural e-HKD Pilot Program is to showcase a particular approach to real estate tokenization. In principle the e-HKD project is a central bank digital currency (CBDC) scheme.Ripple is one of sixteen firms that will participate in the program. Among the other participants are HSBC, one of the largest banking and financial services institutions in the world, British multinational bank Standard Chartered, and Bank of China (Hong Kong).For its part, Ripple will partner with Fubon Bank, a subsidiary of one of the largest financial holding companies in Taiwan. The e-HKD Pilot Program will feature a series of pilots conducted through several industry players with a view towards carrying out in-depth research into application, implementation, and design issues relative to the e-HKD.Real estate tokenization is a leading example of RWA tokenization, which overall is anticipated to become a multi-trillion dollar industry by the end of this decade. Its plan is to build the solution on a private and secure ledger, guided in principle by the same technology that the company has utilized for XRP, the native token of the Ripple ecosystem.Illiquid assetsThe company points out that people’s homes are usually one of their primary assets. Notwithstanding that, unlocking value in real estate can be problematic, having considerable friction. The idea is that this illiquid wealth can be unlocked through tokenization. It’s a concept that is seeing a lot of interest from competing projects. Start-ups like Securitize and Provenance Blockchain would be among a long list of start-up firms that see the potential in the tokenization of RWAs.In Asia, Japanese trading and investment firm Mitsui has gotten involved in the tokenization of real estate through its Alterna investment platform. Tokeny and CoFund offer other examples of innovators that are pioneering real estate tokenization.In its press release, Ripple outlined that it aims to use its technology in this particular instance to enable Hong Kong citizens to experience the faster and more efficient release of equity relative to real estate.James Wallis, Ripple’s VP of Central Bank Engagements & CBDCs, expanded on this idea further:“The Asia Pacific region has many forward-looking regulators such as the HKMA, who are looking to leverage the capabilities of blockchain and crypto technology. It’s a huge honor for Ripple to be one of the select few organizations participating in the HKMA’s e-HKD Pilot Programme. We now have the opportunity to demonstrate how real estate asset tokenization could be brought to the citizens of Hong Kong, and are confident that our fully integrated solution will be an industry-first use case demonstrating the power of leveraging a CBDC for real estate equity asset release.”