Gate.HK ceases operations and withdraws license application in Hong Kong

Axie Infinity Moves Further Mainstream with App Store ReleaseThe developer of Axie Infinity, one of Asia’s most iconic Web3 projects to date, has released a version of its latest game on Apple’s App Store.Photo by James Yarema on UnsplashGame adoption strategyAxie Infinity’s Origins game is a card-based strategy game that allows players to collect, own and use a limitless variety of creatures to take into combat. Sky Mavis, the Singapore-headquartered developer behind Axie Infinity, has taken an interesting approach to bring about adoption for what will ultimately be a Web3 game.Initially, the game was launched on iOS with zero Web3 aspects to it. NFTs will not feature. Players will be given free non-NFT “starter characters.” That’s an entirely different approach to the one employed on the original Axie Infinity game. In that instance, players had to acquire NFT-based characters, by either renting or buying them, in order to participate in the game from the outset.While those starter characters will remain non-NFT in nature, the plan is to facilitate players in purchasing NFT-based characters at a later stage, as they progress within the game. Axie Infinity Co-Founder and COO Aleksander Leonard Larsen explained the strategy in an interview with Decrypt:“Starter Axies will remain as non-NFTs, but eventually as people buy other Axies in app we will want [to] turn them into NFTs.”App Store listingIt appears that the firm has been working on an Apple App Store listing for quite some time already. Larsen explained: “We have been in touch with Apple for about two years now, after a lot of trial and error, the current version is a lite version of Axie Origins with more to follow.”In a social media post, the project confirmed the significance of the listing: “We believe this is the first time that Apple has agreed to make an externally-purchased NFT usable on the App Store.” The initial step to getting listed on the large application platforms started out with a feature-limited Origins listing on the Malaysian version of the Google PlayStore in December 2022, before getting listed on that platform on a broader basis.The project outlined that it was following a similar strategy with Apple. This release will see the Axie Infinity Origin game listed on the Apple App Store relative to the following markets: Argentina, Colombia, Peru, Mexico, Venezuela, Indonesia, Malaysia, and Vietnam. The expectation is that the game will be listed in more territories as matters progress.Token price increaseAs the game runs on Sky Mavis’s Ronin network, an Ethereum sidechain, players who own Axie NFTs will still be able to utilize them in gameplay via the iOS version. The significance of the listing wasn’t lost on Axie Infinity community members. The unit price of the Axie Infinity Shards ($AXS) token, a governance token for the Axie Infinity gaming ecosystem, increased by 8% on Wednesday.Axie has proven to be a standout Web3 project for the Asian region. Axie’s developer, Sky Mavis is headquartered in Singapore although the project first emerged via its Vietnam-based development team.The original Axie game, which captured the imagination of crypto-enthusiasts more so than traditional gamers due to its ‘play-to-earn’ model, really came into its own during the pandemic. In particular, the game garnered a lot of adoption in the Philippines due to the opportunity it presented to Filipinos to earn tokens as a result of gameplay.

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.

Hong Kong’s HaskKey launches app following regulatory approvalHong Kong-based cryptocurrency firm HashKey has unveiled the HashKey Exchange app, which has received the approval of the Securities and Futures Commission (SFC).News of the app launch emerged following insights shared by HashKey’s Chief Operating Officer, Livio Weng, in an interview with The Block recently.Photo by Manson Yim on UnsplashAppealing to retail tradersThe HashKey Exchange app went live on Wednesday, having received regulatory clearance from Hong Kong’s securities regulator the previous Friday. This achievement allows the app to offer full mobile trading capabilities. Prior to this milestone, HashKey had been primarily catering to professional investors under a voluntary licensing scheme.With the new app, Hongkongers can now conveniently purchase bitcoin and ether, utilizing either Hong Kong dollars or US dollars, directly from their local bank accounts. The app launch is significant as HashKey has become one of Hong Kong’s first fully compliant retail-facing crypto trading platforms. “We’ve recorded large trading volume since we began to serve retail users,” Weng stated. The move aligns with the Hong Kong government’s efforts to bolster the virtual asset sector, which was set in motion one year ago with various policy shifts.These shifts included the introduction of a mandatory licensing scheme for cryptocurrency platforms, enabling them to offer tokens with large market capitalizations to retail traders. The new licensing regulations officially took effect in June, with a one-year grace period, though no new exchanges have been approved to date. HashKey and its rival, OSL, had their previous licenses upgraded in August.Developmental challengesHong Kong has faced several challenges on this journey. While the new regulations are largely in line with international norms, the process has been notably expensive, particularly against the backdrop of a bearish crypto market.The lingering fallout from the JPEX scandal, a cryptocurrency exchange allegedly involved in fraudulent activities, continues to impact Hong Kong’s virtual asset landscape. The SFC first raised concerns about JPEX in mid-September, and since then, it has moved to tighten regulation in response, having received thousands of complaints in relation to JPEX.Despite these challenges, HashKey Group has reported significant activity on its retail platform since its launch in August, with a total trading volume exceeding US$600 million. On October 30, the 24-hour trading volume exceeded US$100 million.Planned token launchIn a move designed to incentivize new users, HashKey Exchange has introduced its platform token, HSK, which is slated to be officially listed on the exchange next year. With a total supply of 1 billion HSK, the company has specified that these tokens will not be initially sold to retail investors, emphasizing its long-term vision for the project.Established in Hong Kong in 2018, HashKey Group operates a digital asset brokerage and a venture capital arm. HashKey Exchange earned the distinction of becoming Hong Kong’s second licensed exchange in November of the previous year, following in the footsteps of OSL. Notably, five companies have applied for the new licensing scheme, according to the SFC, while several other exchanges have expressed their intent to pursue similar approval.