3AC Co-founder offers unusual perspective on Singapore prison time

The Chinese autonomous territory of Hong Kong is moving closer towards the issuance of stablecoin licenses, while 30 kilometers away on the Chinese mainland, the authorities in Shenzhen are warning against stablecoin investment scams. Hong Kong has set Aug. 1 as the effective date for its incoming Stablecoin Ordinance. Firms such as JD.com and Ant Group, an affiliate company of Alibaba Group, are understood to be interested in seeking licensing. Photo by ダモ リ on UnsplashSingle-digit license issuanceIn a recent interview with Chinese language newspaper Ming Pao, Christopher Hui, Hong Kong’s Secretary for Financial Services and the Treasury, outlined that stablecoin licenses are likely to be issued in 2025 following the passing of the Aug. 1 effective date, although he indicated that the number of licenses issued will remain in single digits. Hui hopes that stablecoins can address some of “the difficulties and pain points in the real economy,” like cross-border payments involving volatile local currencies. The official said that stablecoins can reduce transaction costs and facilitate cross-border transactions when based on fiat currencies and serving as effective payment tools. Yuan-based stablecoinsHui stated that the issuance of a stablecoin in Hong Kong which is based on the sovereign currency of another jurisdiction would only be permitted following “discussions with the relevant authorities."  It’s understood that the aforementioned Chinese e-commerce firms have been lobbying government for the approval of offshore yuan-based stablecoins. Last month, the Governor of the People’s Bank of China, Pan Gongsheng, acknowledged that stablecoins are disrupting global payments infrastructure. However, mainland China still has a mining and trading ban in place in relation to crypto, despite previous speculation that the country would open up to crypto. Hui expressed the view that where a stablecoin implicates another sovereign currency, there are additional risk factors that would have to be taken into account. Exploiting uninformed view of stablecoinsMeanwhile, 30 kilometers from Hong Kong, the authorities in Shenzhen have issued a warning to members of the public highlighting that scammers are exploiting the public’s uninformed view of stablecoins as a guise through which to lure victims into investment scams. They asserted that scammers are using new concepts, in this case stablecoins, for hype in an effort to peddle illegal fundraising, gambling, fraud and money laundering schemes.The Shenzhen Municipal Task Force Office for Preventing and Combating Illegal Financial Activities asked the public to report such schemes “engaged in illegal fundraising in the name of investing in stablecoins,” in order to enable the authorities to crack down on the illicit activity. The authorities added: "We urge the general public to remain rational in their investment decisions, avoid blindly trusting extravagant promises, develop a correct understanding of money and investment, stay alert to financial risks and avoid falling victim to scams." Last month, JD.com took to Weibo to warn the public that fraudulent JD stablecoins were being offered by scammers at a time when the company has yet to issue a stablecoin.

Abu Dhabi’s Venom Ventures Fund faces market challengesA report by The Block on Friday suggests that Abu Dhabi’s ambitious Venom Ventures Fund, heralded earlier this year with promises of $1 billion investment in Web3 startups, is facing challenges in following through on its mission.Photo by Nazar Skalatsky on UnsplashWhat is Venom?Venom is a collaboration between the Venom Foundation and Iceberg Capital, an alternative asset management company also based in Abu Dhabi. The venture was conceived by Peter Knez, former Co-Chief Investment Officer of BlackRock’s fixed income division and Mustafa Kheriba, Iceberg’s Executive Chairman.In a tweet thread published back in August, the firm described the fund as “old money meets new, the perfect platform for leading the next iteration of blockchain development.” The fund outlined that its approach incorporated venture capital, the offering of a project incubator and a specialist advisory service.Knez has set out lofty ambitions for the fund, stating:“The vision is to drive billions of users into our layer one Blockchain technology by being institutional quality and regulated, and by being such we can actually partner with the government and institutions to help them develop framework for stable coins, for cross-border payment system for tokenization of real world assets and thereby help web2 businesses and citizens move to web3.”At the time of its announcement, Venom Ventures boasted a $20 million investment in Nümi Metaverse and a $5 million strategic investment in Layer 1 blockchain Everscale.Unexpected silenceFurther details on deals struck since January have been scarce, although the fund was reported back in August to have been involved in a blockchain-based carbon credits project, backed by the United Arab Emirates (UAE) Ministry of Climate Change and Environment (MOCCAE).According to The Block, there has been an unexpected silence from the venture as its first year in business comes to a close, despite the initial buzz in the crypto community that greeted the launch of the fund.Venom Ventures positioned itself to cover the entire venture spectrum, from seed to late-stage investments, even offering grants ranging from $25,000 to $200,000. However, a closer look reveals a stark contrast between the fund’s ambitious promises and its current progress. The fund’s website lacks a portfolio section, displaying only a “coming soon” notice.Blockchain mainnet yet to launchThe venture fund has yet to launch its Venom blockchain mainnet, according to Christopher Louis Tsu, CEO of the Venom Foundation. The lack of updates and communication has raised concerns among industry observers about the fund’s overall progress and its ability to fulfill its investment commitments.The broader context of the crypto market adds to the challenges faced by Venom Ventures. Q4 2023 is expected to see a significant drop in venture funding for Web3, down to approximately $2.7 billion from the peak of $13.5 billion in Q1 2022. Market events have left VCs cautious, with notable instances of significant investments being marked down to zero.Amidst these challenges, crypto startups have turned to the Middle East for capital. However, some industry insiders caution that the perceived ease of accessing capital in the Middle East might be a mirage. With that, it remains to be seen whether the fund can revive its initial momentum and deliver on its promise to fuel the growth of Web3 startups in the ever-evolving crypto landscape.

3AC Co-Founder Disputes US Jurisdiction Citing Singaporean CitizenshipKyle Davies, the Co-Founder of the failed Singaporean crypto hedge fund Three Arrows Capital (3AC), has asserted that he is solely a citizen of Singapore and not of the United States.Photo by Towfiqu barbhuiya on PexelsEvading pursuit of damagesThe assertion may have relevance as it may mean that Davies can evade actions taken against him in a US court on the basis of a lack of jurisdiction. In a recent filing with the US Bankruptcy Court for the Southern District of New York (SDNY), Davies presented documents demonstrating that he had renounced his US citizenship in December 2020. He emphasized that he obtained citizenship in Singapore after being issued a passport in early 2021 and that he does not subject himself to the jurisdiction of US courts.$3.5 billion owedIn June it emerged that liquidators appointed for 3AC were seeking to recover $1.3 billion from the fund’s co-founders, Davies and Su Zhu. The firm reportedly owes creditors a staggering $3.5 billion.In the midst of public criticism surrounding the events leading to 3AC’s collapse, Zhu and Davies launched a platform called Open Exchange (OPNX), allowing trading claims against bankrupt crypto firms. Despite a deficit of goodwill for the duo in the crypto sector, they have been putting all their energies into the new venture.Last month, they outlined that they would donate future earnings from OPNX to 3AC creditors. It’s difficult to reconcile that claim when with this action, Davies is trying to evade contributing to creditors via the 3AC bankruptcy process and this legal action taken by the liquidator.Renounced citizenshipAccording to court documents, Davies officially renounced his US citizenship at the US Embassy in Singapore, citing his decision to reside in the country on a long-term basis. He revealed that he got married to a Singaporean national in 2017 and subsequently gained permanent residency in Singapore. Because Singapore does not permit dual nationality, Davies chose to renounce his US citizenship to establish himself fully as a Singaporean citizen.The submission of these documents came after 3AC’s liquidators requested a subpoena to gather information on the crypto hedge fund’s collapse. Both Kyle Davies and Zhu, were subpoenaed on Twitter, as their whereabouts were unknown. However, while Zhu, being a Singaporean national, might not be subject to the subpoena while residing outside the United States, Davies’ refusal to comply with the order led to discussions about holding him in contempt of court.In response to the subpoena controversy, Davies’ legal representatives claimed that he cannot be validly served with process as a non-party in the case, as he has not been a US citizen or resident since well before the case was initiated. They stated that the court lacks personal jurisdiction over him due to his renunciation of US citizenship. Accordingly, they requested that the Service Order and Compel Order, which were based on the assumption that Davies was a US citizen, be vacated.