U.S. seizes $14B in Bitcoin from crypto scheme linked to Cambodia conglomerate

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.

Korean regulator monitors non-listed token amidst peer-to-peer trading surgeThe South Korean financial regulator is closely monitoring BTCMobick, a non-listed token issued by crypto influencer Oh Tae-min, who is known for authoring books like “The Great Bitcoin” and “Bitcoin and the Geopolitics of the Dollar.” The Financial Services Commission (FSC) is cautioning local crypto exchanges regarding the potential for price manipulation should the token be listed.Photo by Daniel Bernard on UnsplashBTCMobick TokenThe BTCMobick token is reportedly being traded peer-to-peer at around KRW 300,000, which is approximately equivalent to $230, in chat rooms of messaging apps like KakaoTalk outside of cryptocurrency exchanges. The token has gained enough traction to spur the emergence of dedicated apps that facilitate these peer-to-peer trades, charging fees for their services. Based on the size of the chat rooms and apps involved, it is estimated that approximately 3,000 participants are trading the token, according to a report by local news website Etoday.As per another coverage by the same outlet, the Virtual Asset Inspection Division of the Financial Intelligence Unit (FIU), which operates under the FSC, has inquired with local crypto exchanges on two occasions — once in September and again this week — about whether they have listed or are planning to list the BTCMobick token. It’s rare for the financial authority to specifically target a particular token when making inquiries with crypto trading platforms.Potential price manipulationAn FIU official explained the rationale behind the agency’s inquiry into crypto exchanges. The official stated that the probe aimed to caution the exchanges about potential price manipulation of the BTCMobick token. The concern is that many crypto users might suffer losses if such a token, which has been experiencing a continual rise in price outside of trading platforms, were to be listed. Currently, legal penalties for cryptocurrency price manipulation fall under the Virtual Asset User Protection Act, which will not be enforced until July 2024. This indicates a regulatory gap in the immediate term.Hwang Suk-jin, a professor at Dongguk University’s Graduate School of International Affairs and Information Security, pointed out that while giving out privately generated tokens to friends or acquaintances doesn’t raise any legal issues, the situation changes once these tokens are listed for trading on exchanges and distributed more broadly in the market. In such scenarios, these tokens can become a source of legal disputes, he explained.Amidst these developments, there are circulating rumors suggesting that BTCMobick is on the verge of being listed on exchanges. An industry insider has mentioned that there are brokers actively spreading these rumors, indicating that the token might soon become publicly tradable.Oh Tae-min’s denial of rumorsMeanwhile, Oh Tae-min, the creator of BTCMobick who has been distributing his token for free, states that the token is part of an experiment intended to mimic the early stages of Bitcoin. However, critics are concerned that the personally issued token has no practical utility. Addressing the circulating rumors about the token’s potential listing on exchanges, Oh asserts that these rumors are baseless and false. He further warns that any brokers spreading such rumors are likely engaging in fraudulent activities.

South Korea’s central bank, the Bank of Korea (BOK), plans to begin testing peer-to-peer (P2P) transactions with its central bank digital currency (CBDC) in October, according to the Seoul Economic Daily. This will mark the second phase of its ongoing CBDC pilot, Project Hangang, which currently allows 100,000 citizens to use digital tokens for payments at both online and offline stores. In the fourth quarter, the pilot will also introduce voucher programs enabling local governments to distribute welfare benefits.Photo by Mathew Schwartz on UnsplashSandbox deadline pressureThe BOK originally planned to gather feedback from participants in the first phase and refine the system before proceeding. However, the central bank decided to speed up the timeline, as the broader project is operating under a regulatory sandbox program that provides two years of regulatory flexibility. A BOK official noted, “Since the current test ends in June, we can’t wait too long to move forward. Also, the fourth quarter timeline is still tentative.” While the BOK focuses on its CBDC, Korean commercial banks are accelerating efforts to develop stablecoin infrastructure and launch related pilot projects, Edaily reported. These initiatives reflect growing expectations that stablecoins will become a key tool for cross-border payments. Banks see this as an opportunity to attract new customers and earn fees from crypto exchanges by facilitating stablecoin transfers through their own networks. One example is Project Pax, a joint initiative involving Shinhan Bank, Nonghyup Bank and Kbank, which is testing stablecoin transfers between South Korea and Japan. Led by Japan’s digital asset platform Progmat, along with Korea’s Fair Square Lab and Korea Digital Asset Custody, the project enables Korean banks to send won-based stablecoins to Japanese financial institutions and receive yen-pegged stablecoins in return. Rising stablecoin useAn executive at a local bank expressed concern that South Korea is falling behind in stablecoin adoption. He predicted faster uptake, noting that consumers can save time and money by avoiding traditional foreign exchange processes. He also cautioned that, without action, the private sector could take the lead in building cross-border payment networks, bypassing the traditional SWIFT system. Another banker urged financial authorities to establish clear regulations for stablecoins, stressing the need for oversight as stablecoins are increasingly used to move foreign currencies out of Korea. Contrasting perspectivesHowever, BOK Governor Rhee Chang-yong remains skeptical of stablecoins, arguing that CBDCs offer far greater transparency. He pointed to the volatility of unregulated stablecoins and warned that their widespread use—especially if issued by private financial institutions—could undermine the central bank’s role as the sole issuer of legal tender. That said, financial authorities appear to be exploring a regulatory framework where CBDCs and stablecoins can coexist. Sharing his personal view, one official noted that while the future of stablecoins is uncertain, it’s important to remain open to various possibilities. He added that agencies are also reviewing recent changes in U.S. federal law, along with regulations in Japan and the EU.