Experts Discuss Korean Security Token Market

Hong Kong Deems Crypto as PropertyIn dealing with a case involving defunct Hong Kong-based cryptocurrency exchange Gatecoin, a Hong Kong judge has determined cryptocurrency as being property “capable of being held in trust.” Presiding over the case, Justice Linda Chan stated recently that Hong Kong takes a broad definition of what constitutes property.©Pexels/mitbg000Digital assets held in trustHaving expended efforts to try and recover funds from a former payments service provider that the company had partnered with, Gatecoin announced that it would shut down the business and commence the liquidation of the business in 2019. With bankruptcy proceedings being notoriously slow, that process continues today, resulting in Justice Chan’s recent determination.The notion of property held in trust is a common theme that has been explored in a number of cryptocurrency business bankruptcy processes recently, including the BlockFi, Celsius and FTX processes.Gatecoin has not proven to be any different in this regard. Liquidators had turned to the Hong Kong courts for direction as to how creditors’ digital assets, as held on the platform, should be defined. If property is deemed to have been held “in trust”, then that determination has implications for the owner of those assets relative to the bankruptcy proceedings.In the case of BlockFi, a determination was made in a US court that those who had simply custodied digital assets with the platform without earning any yield were property owners and that they should have their assets returned.The importance of Terms of Service (ToS)Alex Mashinsky, the founder and CEO of failed crypto lending competitor Celsius outlined to service users on a number of occasions that the assets remained their property even though his company used customer assets for various trading activities. The bankruptcy judge reached a different determination based on the terms of service. Service users had acknowledged in signing off on Celsius’ terms of service that assets held on the platform that accessed yield-bearing products became the property of Celsius when deposited within those products on the Celsius platform.Although it has not been dealt with yet, 1.4 million creditors relative to the bankruptcy process of failed cryptocurrency exchange FTX are likely to discover later this year if they can claim “in trust” property rights. An ad hoc group of creditors has taken legal action for the return of their digital assets on the basis of an assertion that the assets remained their property when transferred onto the platform.ImplicationsWhilst a seemingly uninteresting determination to anyone less informed about such bankruptcy proceedings, such decisions can have profound consequences. In a bankruptcy process, there is a hierarchy of creditors, with some having greater rights than others when it comes to the distribution of bankruptcy estate funds. Recognition of assets being held in trust as property would likely take those property owners out of the bankruptcy process, allowing the return of their funds (where available) while others who are classified as creditors get a distribution of whatever funds are left in the bankruptcy estate thereafter.Additional complexityGatecoin’s case was further complicated by the existence of various sets of terms of service. In two of the three instances, the court found that no trust language existed. There is one subset of creditors who may have the ability to claim their digital assets as property. The liquidators have agreed to identify them and contact them in that regard.While the process may be proving to be a minefield for Gatecoin’s creditors, it has served a broader purpose in crypto more generally as it has provided yet another opportunity for another jurisdiction, in this instance Hong Kong, to provide some more clarity with regard to the legal status and standing of cryptocurrency.

The Singapore Police Force (SPF) and the Cyber Security Agency of Singapore (CSA) have jointly issued an advisory to raise awareness about the escalating use of cryptocurrency drainers in cyberattacks. The advisory aims to inform citizens about the threat and provide recommendations to protect against such attacks, with a specific emphasis on utilizing hardware wallets for enhanced security. Cryptocurrency drainers represent a form of malware that specifically targets crypto wallets. These malicious tools are often employed in phishing attacks to illicitly extract funds from users' wallets without proper authorization.Photo by Junrui Wu on UnsplashDrainer-as-a-service threatOf particular concern are commercial crypto draining kits, which empower less experienced cyber-criminals with sophisticated malware at no upfront costs. Operating on a drainer-as-a-service (DaaS) model, attackers share a predetermined percentage of the stolen funds with the service provider. The SPF and CSA underscored that crypto-drainer-related attacks typically originate from phishing campaigns. These campaigns commonly involve infiltrating verified social media accounts or dispatching fraudulent emails to users from compromised databases of major service providers. Unsuspecting victims who click on phishing links are redirected to counterfeit trading websites that prompt them to connect their Web3 wallets. Subsequently, a malicious smart contract is injected into the victim's system, enabling hackers to withdraw funds without additional authorization. MS Drainer and Inferno DrainerWhile no such attacks have been reported in Singapore to date specifically, the advisory acknowledges the rising recognition of this threat among hackers. Notably, an off-the-shelf crypto drainer called MS Drainer contributed to hackers stealing $59 million worth of cryptocurrency in 2023. Last month, Singapore-based cyber security firm Group-IB produced a report concerning the Inferno Drainer operation. According to the company’s research, the malware operation led to the theft of $80 million in digital assets globally, until the developers behind it shut it down last November. In December, the Pink Drainer hacking group notched up another victim, to the tune of $4.4 million in LINK tokens. Last week blockchain security firm Scam Sniffer reported that $10 million in digital assets had been stolen in phishing-related incidents over the course of just five days. Hardware walletsTo counteract these threats, Singapore authorities recommend the use of hardware wallets as a security measure against wallet drainer attacks. Additionally, the advisory instructs crypto investors to conduct thorough research before engaging with cryptocurrency services or platforms. Singaporeans are encouraged to report any suspicious incidents related to crypto drainers or phishing attacks to both relevant authorities and crypto service providers. In the event of a security breach, victims are urged to revoke any suspicious token approvals and promptly transfer their remaining funds to a different, secure wallet address to prevent further losses. This proactive approach aims to empower individuals with the knowledge and tools needed to navigate the risks associated with crypto drainers and foster cybersecurity awareness within the cryptocurrency ecosystem. As the threat landscape evolves relative to digital assets, this advisory serves as a valuable resource to educate citizens about the risks posed by crypto drainers.  

Vietnamese authorities have dismantled a criminal ring that used cryptocurrency to launder illicit gambling profits, AFP reported, citing local media. The group converted local currency into digital assets such as USDT and Ethereum, routing funds to users for online betting. Operating multi-layered investment websites, the network grew to as many as 20,000 users and managed 25 million accounts, despite Vietnam’s ban on cryptocurrency. In total, the transactions involved were valued at roughly $3.8 billion. Police allege that millions of dollars were funneled into real estate, luxury cars, and cross-border cash transfers. While the money laundering probe continues, the gambling case has already produced convictions. Four Vietnamese siblings who ran the network, along with 39 other defendants, received sentences in Ho Chi Minh City ranging from a three-year suspended term to 13 years in prison. An Indian national identified as the alleged mastermind remains at large.Photo by Amanda Jones on UnsplashThai police foil crypto-themed fraudElsewhere in the region, police in neighboring Thailand busted a South Korean crime syndicate based in Pattaya that allegedly stole more than 20 billion won ($14.2 million) through fraud schemes that invoked cryptocurrency as a lure, along with other scams, the Chosun Ilbo reported. The scam ring reportedly obtained customer data from a lottery tip site and collected money from victims either by posing as agents offering membership refunds or by claiming to provide compensation for leaked personal information, which they disguised as opportunities to buy digital assets. In addition to these schemes, the syndicate ran romance scams and posed as authorities. Thai police arrested 20 members in a June resort raid. Nine more suspects, including ringleaders, remain in custody awaiting extradition. Seoul police said that, in total, 25 members have been caught, 21 of whom are now detained. Authorities believe the network may be linked to other groups in Thailand and are widening the investigation. Europe uncovers $120M crypto fraudCrypto crimes aren’t limited to Asia. In Europe, police arrested five suspects in a Eurojust-led operation that uncovered an online investment scam worth at least €100 million ($116.8 million). Operating since 2018 across 23 countries, the scheme lured victims with platforms promising high returns, then funneled deposits through Lithuanian accounts before disappearing. In a report by the Organized Crime and Corruption Reporting Project, Elliptic Chief Scientist Tom Robinson said such schemes often have little to do with cryptocurrency itself, instead exploiting its technical obscurity and the allure of quick gains. Beyond scams, outright theft from crypto platforms is also climbing. A Chainalysis study found that by the end of June 2025, more than $2.17 billion had been stolen from exchanges and related platforms—already surpassing the total for all of 2024. The firm projects losses could reach $4 billion by year-end. The single largest incident was the February hack of the Bybit exchange, in which thieves took $1.5 billion, roughly 69% of all funds stolen in the first half of this year. Crypto crime turns increasingly violentThe Chainalysis report also flagged a rise in physical attacks, in which criminals use violence or coercion to force individuals to hand over their crypto holdings. The firm warned that 2025 may log nearly twice as many cases as the worst year on record, noting that the attacks often rise and fall with expectations for Bitcoin’s price. In response to these threats, Chainalysis stressed the need for a multilayered approach to crypto security. It advised service providers to strengthen internal controls through regular audits and employee screening, while upgrading wallet infrastructure and other technical defenses. For individuals, the firm said, keeping holdings discreet has become as critical as technical safeguards, especially amid the rise in physical attacks.