Bhutan’s GMC to establish strategic crypto reserve

OKX collaborates with Polygon Labs on layer-2 network launchSeychelles-incorporated OKX, one of the world’s largest cryptocurrency exchanges, has collaborated with blockchain development firm Polygon Labs to unveil the testnet for its latest zero-knowledge layer-2 network, named “X1.”Photo by Shubham Dhage on UnsplashIntroducing “X1”The company announced initial details on X1 via a press release published on Tuesday. This Ethereum-based ZK network has been constructed using the Polygon Chain Development Kit (CDK), with OKX playing a pivotal role as a core contributor to the CDK. Substantial engineering resources are being invested by OKX to strengthen the Ethereum scaling solution.The new network will serve to bolster the utility of OKX's native token, OKB. OKB will be used for X1’s gas fees. There has been a lot of chatter about the utility of exchange tokens following the collapse of FTX, as that platform was over-reliant on its native token in propping up the exchange. Similarly, critics are speculating that a comparable dynamic may be at play at Binance, relative to its native token BNB.Likely buoyed by news of this development, OKB observed a 10% unit price increase on Tuesday. However, that move has retraced downwards in the meantime.ZK proof technologyX1 has been designed with ZK proofs, a method through which one party can convince another that a particular claim is true without disclosing details of the claim itself. In this way, X1 ensures high security and scalability while mitigating transaction costs. The network seamlessly aligns with Ethereum, facilitating the secure deployment of EVM-based dApps and connectivity with a wide array of smart contracts, wallets and tools. OKX underscores X1’s status as its new native network.Chief Innovation Officer of OKX, Jason Lau, expressed optimism about X1, deeming it integral to the firm’s efforts in guiding users into the realm of Web3. Lau emphasized the scalability and accessibility of X1, especially for developers who can leverage it to construct user-friendly Web3 applications while maintaining interoperability with other networks.The collaboration with Polygon Labs marks another milestone in the evolution of Polygon’s CDK. Launched in August, the CDK enables the development of layer-2 blockchains on Ethereum, emphasizing zero-knowledge proofs. Networks deployed using the CDK gain the ability to connect to a shared ZK bridge, fostering interoperability.Sandeep Nailwal, co-founder of Polygon, underscored the significance of X1’s adoption of Polygon CDK technology, envisioning a future where CDK-deployed chains interoperate and coexist within a larger network of ZK-powered layer 2s in the Polygon CDK ecosystem. The CDK has gained traction, with various Layer 2s, including Immutable zkEVM, IDEX, Palm Network and Astar zkEVM, currently in development using this technology.Industry trendA trend is developing among crypto exchange platforms and their involvement in establishing layer two networks. Earlier this year, U.S. crypto platform Coinbase introduced the Base network, an Ethereum layer-2 network that focuses on offering a safe, low-cost and developer-friendly mechanism to build on-chain.Last week, it emerged that another leading U.S.-based crypto platform, Kraken, is on the lookout for a development partner to enable it in building out its own layer-2 blockchain network. According to those reports, it’s understood that Kraken is considering partnering with Polygon Labs, Matter Labs or the Nil Foundation.As this OKX-Polygon Labs collaboration progresses, the industry will continue to observe how X1, with its innovative technology stack and seamless integration with Ethereum, contributes towards broader Web3 development.

Terraform Money Trail Leads to Swiss BankAuthorities in both South Korea and the United States continue to advance their investigations into Terraform Labs, the Singapore-based company behind collapsed algorithmic stablecoin Terra USD (TUSD) and its South Korean CEO, Do Kwon, with the latest developments involving transfers made to a Swiss bank.©Pexels/Robert StokoeFollowing the moneyIn a lawsuit filed by the Securities and Exchange Commission (SEC) in the United States in February, the Commission claimed that Do Kwon and his company Terraform Labs transferred 10,000 Bitcoin to a Swiss bank. It now appears that the bank in question is digital asset banking specialist, Sygnum Bank.It’s understood that Do Kwon converted a large proportion of that Bitcoin into cash. According to Finbold, the Financial Securities Crime Joint Investigation Division at the Seoul Southern District Prosecutor’s Office has disclosed that it is following the digital asset trail to Switzerland in an effort to secure associated funds.LFG fundsThe funds are believed to have belonged to the LUNA Foundation Guard (LFG), an entity that was established with the objective of building reserves and safeguarding the USD peg of the Terra USD algorithmic stablecoin during volatile market conditions.Roughly 130 billion won, or $100 million, is being pursued, between digital assets and cash held within various Sygnum accounts. South Korean authorities had previously indicated that they were investigating transfers made by Do Kwon to a prominent Korean law firm. Earlier this week, they charged ten individuals connected to Terraform Labs with various offenses.During the press conference in which those charges were brought, the Seoul Southern District Prosecutor’s Office stated:”We have also confirmed that $100 million has been used in several places, not left in the Sygnum account as it is, and some transfers have been made to the Kim & Chang law firm account (at the attorney’s expense) and the remaining amount is about billions of won.”International complexityThis recent phase in the investigation is revealing the international nature of the case and the complexity that brings with it. Authorities in the United States and South Korea have submitted requests to have certain Sygnum Bank accounts frozen. Do Kwon and Terraform Labs are trying through the courts to have the SECs involvement dismissed on the basis that Terraform was a Singaporean company and Do Kwon a South Korean national, and on that basis they claim that the SEC lacks jurisdiction.Sygnum, being a Swiss entity will have to abide by what Swiss authorities instruct it to do relative to the Terraform-related funds held in accounts with the bank. Sygnum told Finbold that it couldn’t comment on whether it had received requests to freeze assets.The bank stated: “We can communicate that after the collapse of Terra in May 2022, on the basis of an official court order, Sygnum transferred more than 70% of the Bitcoin-sale FIAT proceeds into the escrow account of an international and to other reputable law firms.” It added that no Swiss or foreign authority has accused Sygnum of any wrongdoing.

A couple of days have passed since the 22nd general election took place in South Korea, whose results have disappointed President Yoon Seok-yeol and the country's ruling People Power Party (PPP). The main opposition Democratic Party of Korea (DPK) won the election in a landslide, securing a total of 175 seats out of 300 in the National Assembly.   Now, with the DPK set to continue exerting control over the National Assembly, financial industry insiders are focusing on whether the liberal party will stick to its campaign pledges to ease regulations on cryptocurrencies and related products – most notably, approving investment and trading of spot Bitcoin exchange-traded funds (ETFs) within the country, according to media outlet Yonhap Infomax. Ever since the U.S. Securities and Exchange Commission (SEC) approved spot Bitcoin ETFs in January, interest surrounding such products has intensified among Korean investors. Photo by Alesia Kozik on PexelHowever, the Korean Financial Services Commission (FSC) has been reluctant to approve such spot ETFs, citing the potential risk of such approval violating the Financial Investment Services and Capital Markets Act. Various pledges to ease crypto regulations The DPK, in response, has introduced several campaign pledges aimed at easing crypto regulations, both to win votes from younger Koreans – especially those in their 20s and 30s who make up a significant portion of crypto investors in the country – and to bolster the local crypto market. Among these pledges was to include virtual asset ETFs in Individual Savings Account (ISA), which would enhance tax breaks for crypto gains. Another notable pledge was to deduct taxes on crypto gains worth up to KRW 50 million (approximately $36,560). Under the current law, only crypto gains within the limit of KRW 2.5 million qualify for the tax deduction. One local crypto insider commented on the outcome of the general election, saying that the industry will need to keep an eye on how the situation surrounding crypto regulations develops, as easing such regulations was one of the key promises the DPK made during the election campaign period.   Still, long way ahead for Korea to approve spot Bitcoin ETFsMeanwhile, CryptoQuant CEO Ki Young Ju left a comment yesterday on the X (formerly Twitter) post written by crypto analyst MartyParty, which reads, "South Korea has approved spot Bitcoin ETFs."  Ju pointed out that South Korea still has "a long way to go" when it comes to approving spot Bitcoin ETFs, noting that just because "the Bitcoin-friendly Democratic Party," or the DPK, won the general election doesn't mean that financial regulators have approved such products.