Binance survey reveals evolving security habits of Asian platform users

OKX is set to compensate users after its native exchange token, OKB, experienced a rapid 48% flash crash on Tuesday. OKB price fluctuationThe crash occurred within a brief three-minute window, triggered by a series of liquidations resulting from an abnormal price fluctuation. During the event, OKB's diluted market capitalization plummeted by $6.5 billion. At around 9 a.m. GMT on Tuesday, the price of OKB dropped from $46.80 to $25.10, representing a 48% decrease within 15 minutes. However, the token has since recovered, currently trading at $47.63 at the time of writing. The crash led to the triggering of liquidations for large leverage positions, causing a cascading effect on pledged loans, leverage transactions and cross-currency transactions.Photo by Nicholas Cappello on UnsplashCompensation planOKX responded promptly, pledging to fully compensate users for any additional losses incurred due to abnormal liquidation. The exchange aims to launch a specific compensation plan within the next three days, taking into account users who engaged in on-chain trades. In a statement on Tuesday, the platform suggested that it is committed to enhancing "margin position tier rules, risk management controls and liquidation mechanism" to prevent similar issues in the future. The flash crash coincided with a day of notable price swings across cryptocurrency markets, partly driven by the Grayscale Bitcoin Trust's (GBTC) sale of bitcoin to meet investor redemption demands on its exchange-traded fund (ETF). Additionally, the bankrupt crypto exchange FTX has been selling nearly $1 billion worth of GBTC ETF shares recently, further contributing to market volatility. Focusing on complianceOKX has been actively focusing on regulatory compliance in recent times. On Dec. 29, the exchange announced the delisting of several privacy coins, including Monero (XMR), Zcash (ZEC), Dash (DASH) and Horizen (ZEN). Subsequently, on Jan. 2, the platform introduced additional requirements for United Kingdom users to comply with the new Financial Conduct Authority (FCA) regulations, including the mandatory completion of risk assessment questionnaires before engaging in trading activities. Flash crashes are a common occurrence in cryptocurrency markets, often attributed to thin liquidity distributed across multiple venues. The 2% market depth for OKB indicates that a sell order exceeding $224,000 could potentially trigger another price cascade. Notwithstanding that, oftentimes it can be difficult to pinpoint the precise reason for a flash crash. In 2021 global crypto exchange Kraken experienced a flash crash that saw token prices drop by in excess of 50% over the course of one hour before recovery was achieved. While some suggested it was caused by a technical glitch, Kraken founder Jesse Powell dismissed that notion, pointing instead to the possibility of a large-scale sell-off by a service user. Despite this recent challenge, OKB remains a significant player in the cryptocurrency space, boasting a market cap of $2.8 billion, making it the fourth-largest exchange token in circulation, according to CoinGecko. 

Bakkt Signals Interest in Entering Hong Kong MarketBakkt, the US digital asset platform owned by Intercontinental Exchange, Inc., the owner of the New York Stock Exchange (NYSE), has set its sights on international expansion, with Hong Kong headlining its focus on regions that offer clearer regulatory frameworks for cryptocurrencies.Photo by Jimmy Chan on PexelsGreater regulatory clarity overseasCEO Gavin Michael highlighted Hong Kong as a target market for the company, given that the autonomous Chinese territory is making rapid progress in establishing regulatory clarity, and at a faster pace than in the United States. Alongside Hong Kong, Michael also earmarked the UK and parts of the EU as possible target markets based on similar rationale.Michael made the comments while speaking at the Piper Sandler Global Exchange & FinTech Conference in New York recently. While emphasizing the company’s commitment to the US market, Michael stated that Bakkt is actively seeking markets where it can gain traction and utilize them as a catalyst for growth. The recent acquisition of Apex Crypto, an integrated crypto-trading platform based in the US, further supports Bakkt’s international plans.Leveraging existing partnershipsMichael anticipates leveraging Apex’s existing partnerships with companies such as Webull, M1, Public.com, and Stash to facilitate expansion into international markets. Bakkt aims to accompany these companies as they venture into offering US equities trading, enabling the addition of crypto trading with minimal barriers to entry. However, regulatory concerns have led to the delisting of 25 tokens on the Bakkt platform.Michael highlighted the progress being made in crypto markets outside the US, where regulatory clarity is being achieved more rapidly. He cited the UK’s advancements in clear crypto regulation, Hong Kong’s allowance of trading certain cryptocurrencies, and the EU’s implementation of the MiCA framework for crypto regulation. While supportive of recent regulatory actions in the US, Michael believes that the country needs to provide further clarity, particularly at the federal level.The lack of regulatory clarity in the US has impacted Bakkt’s ability to collaborate with domestic companies. Despite launching with notable partnerships, including Microsoft and Starbucks, Michael revealed that many firms are awaiting clear regulatory guidelines before entering the cryptocurrency space. He noted that trading activity has been slower compared to Bakkt’s custody service, as regulatory clarity plays a significant role in shaping consumer sentiment and providing operational guidelines for trading platforms.Interest in Lightning NetworkIn addition to exploring international expansion, Bakkt is actively considering the use of the Bitcoin Layer 2 Lightning Network for custody and settlement services. Michael explained that this technology has the potential to revolutionize financial services, particularly cross-border payments.Bakkt’s strategic focus on markets with regulatory clarity and its acquisition of Apex Crypto demonstrate the company’s intent to grow beyond the US. By expanding into Hong Kong, the UK, and the EU, Bakkt aims to meet the demand of partners eager to explore these markets.However, the company recognizes the need for the US to provide clearer regulatory guidelines to foster innovation and accelerate adoption within the domestic cryptocurrency industry. With its custody services gaining traction, Bakkt is still optimistic about the potential of trading as regulatory clarity continues to improve. Moreover, Bakkt’s exploration of the Lightning Network showcases its desire to leverage emerging technologies for more efficient financial services.

Terraform Labs civil trial proceeds with confidential filingsSingaporean blockchain development firm Terraform Labs, the creator of the failed Terra blockchain protocol, has reached an agreement on a protective order in their ongoing civil case with the United States’ Securities and Exchange Commission (SEC).Photo by Thomas Habr on UnsplashData shielded from public disclosureThe decision, sanctioned by the U.S. District Court Judge Jed Rakoff in the Southern District of New York on Wednesday, ensures that materials marked as confidential by the involved parties will remain shielded from public disclosure. The court is obligated to seal any discovery filings labeled confidential ahead of the trial.Judge Rakoff conveyed his likelihood of denying requests to unseal these confidential documents, although the order did not delve into the specific rationale for maintaining their confidential status beyond citing “good cause.” The finalized agreement on this protective order took place on Dec. 18, with legal representatives from both the SEC and Terraform Labs, including co-founder Do Kwon, giving their consent. Kwon, presently detained in Montenegro, faces potential extradition to the United States or South Korea.Pivotal momentThe depegging of Terraform’s stablecoin TerraUSD (UST) from the U.S. dollar marked a turning point in the cryptocurrency sector. This event is believed to have significantly contributed to the crypto market downturn in 2022, as it had a knock-on effect on countless other crypto businesses and platforms that were over-exposed to the flawed algorithmic currency.That chain of events led to the SEC taking action after the fact. However, it has subsequently also pursued a much criticized “regulation by enforcement” policy relative to the crypto sector. To that end, the Commission has pending cases against Coinbase, Ripple, Kraken and Binance, among others.In February, the SEC accused Terraform Labs and Do Kwon of conducting a multi-billion dollar crypto asset securities fraud by offering and selling unregistered securities. As proceedings have unfolded, both Terraform and the SEC have traded unsuccessful attempts to obtain summary judgment.Far-reaching consequencesThe ongoing SEC vs. Terraform civil case carries potential far-reaching consequences in terms of legal precedents within the cryptocurrency sector. In a separate ruling in August, the court allowed Terra to issue subpoenas to FTX entities as part of FTX’s bankruptcy proceedings. Judge Rakoff, in November, accepted confidential materials from Jump Crypto Holdings for discovery in this case.Troubled crypto lender Genesis Trading has also been tangled up in the proceedings with the courts directing it to comply with a subpoena initiated by Terraform Labs. The outcome of this case is poised to offer essential legal guidance for numerous companies operating in the crypto space.The SEC’s regulatory approach toward cryptocurrency firms in the United States has been subject to considerable debate and criticism. The commission’s alleged “regulation by enforcement” strategy, especially in dealings with major players in the crypto industry, has drawn accusations.While many in the U.S. have been unhappy with “regulation by enforcement,” the upside is that over the longer haul, the courts will be able to eventually furnish the regulatory clarity that the SEC refuses to provide. The ongoing scrutiny of regulatory approaches and the outcomes of cases like Terraform Labs vs. SEC will undoubtedly shape the future legal landscape of the cryptocurrency industry.