Hong Kong Says No to Light Touch Regulation

Dunamu Loses Lawsuit Seeking $19M in Corporate Tax Refunds After Venture Status RemovalDunamu, the operator of South Korea’s largest cryptocurrency exchange Upbit, lost a 24.8-billion-won (approximately $18.7 million) corporate tax lawsuit, according to local news outlet The Korea Economic Daily. This legal action emerged after Dunamu was removed from the list of registered venture firms in December 2018. The Seoul Administrative Court ruled that since Dunamu was no longer a venture, it was not eligible for the associated tax benefits.Photo by Tingey Injury Law Firm on UnsplashLosing venture statusIn September 2017, Dunamu obtained certification as a venture company from the Ministry of SMEs and Startups. However, this certification was revoked in December of the following year. This revocation was due to an amendment to the Enforcement Decree of the Venture Businesses Act in October 2018, which resulted in the exclusion of “blockchain-based crypto asset trading and brokerage” from the venture business classification. Consequently, the withdrawal of this certification rendered the company ineligible for government tax incentives.Tax refund request deniedIn August 2020, Dunamu took action by formally requesting a refund of KRW 24.8 billion in taxes previously paid to the tax office. The foundation of its claim rested on its entitlement to venture company tax benefits up until the corporate tax period of 2018. However, its request was turned down, leading Dunamu to escalate the matter by initiating an administrative case against the tax authorities, following an unfavorable decision by the Korean Tax Tribunal.Meanwhile, an amended version of the Act on Special Cases Concerning Taxation Restrictions, which excluded cryptocurrency-related industries from benefiting from tax reductions, went into effect in January 2019. Pointing to the effective date of this act, Dunamu argued that the company should be entitled to benefits applicable up until the corporate tax cycle of 2018. Furthermore, Dunamu highlighted its legal action, which had led the administrative court to suspend the effects of the venture company certification revocation from December 31, 2018, to January 18, 2019.Court’s stanceDespite these arguments, the court rejected Dunamu’s argument and upheld that tax relief could not be granted for the tax year encompassing the date of the removal of its venture status. Additionally, the court affirmed that the tax authorities’ decision was valid since the venture status had been revoked in 2018, regardless of the amended Taxation Act’s implementation.In disagreement with the court’s ruling, Dunamu has filed an appeal against the decision.

Report: Vietnamese Crypto Investors Rely Heavily on ReferralsWhile Vietnam has been leading the way in terms of cryptocurrency adoption among ordinary people, the decision-making process of Vietnamese crypto holders also sets them apart, according to a new report.The report, a collaboration between Vietnamese venture capital firms Kyros Ventures and Coin68, in association with Hong Kong-based Web3 firm Animoca Brands, reveals a striking trend. 76% of Vietnamese crypto holders base their investment choices on recommendations from friends and acquaintances.Photo by Silver Ringvee on UnsplashThe importance of referralsReleased on Wednesday, the report relied upon a survey involving 3,300 participants. A staggering 75.5% of respondents admitted that their crypto investment decisions were significantly “influenced by recommendations or referrals.” This figure stands at 2.5 times the equivalent percentage reported in the United States.Aside from word of mouth, Vietnamese crypto investors rely heavily on self-study, community groups, and media news as primary sources of information relative to crypto. Nearly 50% of survey participants indicated their reliance on these methods for staying informed about the crypto market.Market sentimentThe “Vietnam Cryptocurrency Market Report” for the first half of 2023 also sheds light on the sentiments of the crypto community. It indicates that 70% of survey participants believed that the bear market has already concluded or is approaching its end.Notwithstanding that, another data point could be interpreted such that market participants are still exercising an abundance of caution. Around 60% of respondents confirmed that they hold stablecoins as a significant constituent of their portfolios. Stablecoins are widely used by traders when exercising risk-off positioning.Interestingly, another finding of the report is the fact that an overwhelming 75% of respondents expressed a desire for increased regulatory intervention within the crypto sector. It’s unlikely that this is coincidental, given the number of high-profile crypto platform failures that took place in 2022.Vietnam leading adoptionChainalysis data confirms Vietnam’s dominant position globally in terms of crypto adoption and its impressive second-place ranking in decentralized finance (DeFi) adoption. Remarkably, more than 19% of adults in Vietnam own digital assets while Vietnam ranks among the top five countries when it comes to trading volume on global crypto platform Binance.However, this level of adoption stands in contrast with the limited educational infrastructure supporting it. Only nine educational institutions in the country offer blockchain courses.The survey also probed into user behavior within various crypto domains. The findings show a significant engagement in DeFi activities, with nearly 90% of respondents participating. By the end of 2022, there were in excess of 200 active blockchain projects in operation within Vietnam.GameFi, non-fungible tokens (NFTs), centralized finance (CeFi), and SocialFi are also popular among the Vietnamese crypto community, with engagement rates of between 55% and 91%. The research also found that users maintain a balanced preference between centralized and decentralized exchanges.The report concludes by highlighting the rapidly evolving local tech landscape and its synchronization with global trends. Largely, the report points to a positive sentiment in Vietnam relative to the future of cryptocurrency and Web3 innovation in the country.

Midas Investments Founder Launches Locus FinanceIakov Levin, the founder of the recently failed Dubai-headquartered custodial crypto investment platform Midas Investments, has unveiled his latest project, Locus Finance, a DeFi platform.Photo by Shubham’s Web3 on UnsplashStarting overThat’s according to a recent report published by The Block. Locus Finance’s main focus lies in providing connectivity with high-yield tokenized vaults. In its initial stages, the company will introduce three yield-generating products, centered around Ethereum staking, DeFi expansion, and Arbitrum trading.Levin believes that investors are not interested in the intricacies of blockchains, protocols, or daily portfolio management. This is where vaults play a crucial role, catering to the retail yield market and generating profits for retail investors. In a statement Levin said:“Investors don’t want to worry about blockchains, protocols, transaction costs, and daily portfolio management. They need specific exposure in a set-and-forget style. Vaults represent a unique approach necessary for maturing the retail yield market, allowing for optimal wealth generation for retail investors.”With Locus Finance, Levin aims to learn from past experiences and provide a platform that meets the demands of retail investors seeking a more simplified and profitable DeFi experience. The company’s approach centers around yield generation and a seamless user experience, allowing users to focus on their investments without being bogged down by complex technicalities.Midas downfallMidas Investments, established in 2018, had seen significant success as a custodial crypto investment platform which offered yields on a range of digital assets. It managed assets worth over $250 million at its peak in 2021. However, the volatile market conditions in 2022 led to losses exceeding $50 million, forcing the company to close its doors in December 2022.The loss incurred accounted for 20% of the $250 million assets under management (AUM). The platform’s demise followed the collapse of prominent projects like Terra, FTX, and Celsius earlier in 2022. Those collapses prompted Midas Investments users to withdraw over 60% of their assets. That run on the platform rendered its fixed yield model unsustainable.Midas faced total liabilities of $115 million in Bitcoin, ETH, and stablecoins, with assets valued at $51.7 million. At the time of the platform’s collapse, Levin expressed his optimism about future plans. He disclosed plans to introduce an offering that would feature new investment strategies. Fast forward seven months and it appears that those plans have taken shape in the form of this newly-launched Locus Finance platform.However, Locus Finance’s success will be closely monitored in light of the challenges faced by its predecessor. A former Midas Investments customer took to Reddit three months ago to warn people to stay away from the new platform once launched.At that time, Midas Investments management had advised customers of its intention to start over via Lotus Finance. “Users lost tons of money and Midas got away with the bags. . . . I’d recommend staying as far away from them as possible,” the former customer warned.