Japan weighs probe into prime minister-themed ‘Sanae Token’

Bankruptcy Judge Permits Terraform Labs to Subpoena FTXIn a significant development in the bankruptcy case of defunct crypto exchange FTX, a judge has granted Singapore-based Terraform Labs the authority to subpoena information related to its ongoing case brought by the United States Securities and Exchange Commission (SEC).Photo by Bermix Studio on UnsplashHack allegationsTerraform Labs, the blockchain company that developed the Terra blockchain and failed US dollar stablecoin UST, claims that the failures of its algorithmic stablecoin and governance token were the result of an attack from short-sellers, possibly involving Alameda Research (FTX’s sister company).The order, issued by Judge John Dorsey on Monday, allows Terraform Labs to serve subpoenas to FTX Trading and FTX US, aimed at collecting evidence to support its defense against the SEC’s allegations of fraud. According to court filings, lawyers representing the FTX Debtor have not formally objected to the court order.Terraform Labs’ request for subpoena power stems from its belief that short-sellers connected to FTX entities played a role in the failure of the algorithmic stablecoin and governance token, leading to the collapse of the crypto firm. The ability to obtain information from FTX through the subpoenas could be crucial in bolstering Terraform Labs’ defense against the SEC’s fraud charges.UST collapse falloutThe collapse of the UST stablecoin in 2022 contributed to a major market crash, resulting in a significant drop in the prices of many tokens. As a result, the company filed for bankruptcy in November 2022. The Co-Founder of Terra, Do Kwon, is currently serving a four-month sentence in a Montenegrin prison for using false travel documents. He may also face extradition to the United States or South Korea on fraud charges related to Terraform Labs.Motion to dismiss deniedIn a separate high-stakes ruling, US District Judge Jed Rakoff denied Terraform Labs’ motion to dismiss the securities fraud lawsuit filed by the SEC. The judge’s decision allows the SEC’s case against Terraform Labs and Do Kwon to proceed, rejecting defense arguments that the agency lacked jurisdiction and that Terraform’s TerraUSD stablecoin did not qualify as an unregistered security.Judge Rakoff’s ruling is a significant victory for the SEC as it intensifies its enforcement actions against crypto companies involved in allegedly unlawful token sales. He found the collapse of TerraUSD, which lost its dollar peg and incurred a $40 billion loss last year, plausible as a reason to consider the token as a security that should have been registered.Moreover, Rakoff dismissed Terraform’s claim that the SEC lacked the authority to regulate stablecoins without explicit Congressional authorization, asserting that the crypto industry was significant enough to warrant application of the “Major Questions Doctrine.” This doctrine limits agency overreach into major political issues but does not apply to the crypto asset markets.The judge also rebuffed Terraform Labs’ attempts to draw parallels between the Ripple case and its own. In the Ripple case, a different judge ruled that Ripple’s XRP token sales to retail investors did not violate securities laws due to the manner of purchase on secondary markets. Rakoff firmly stated that such distinctions did not apply under the legal Howey test governing whether crypto assets qualify as securities.

Chinese Court Recognizes Virtual Assets as Legal PropertyAccording to a recent report published by the People’s Courts of the People’s Republic of China, a Chinese court has recognized the legal status of virtual assets, having analyzed their attributes within the framework of Chinese criminal law.The court unequivocally stated that virtual assets are considered legal property under the current legal policy framework and are thus protected by law.The People’s Courts of the People’s Republic of China exercise judicial power independently, free from interference by administrative or public organizations. They have responsibility for adjudicating civil, criminal, and administrative cases.Photo by Christian Lue on UnsplashProperty classificationLocal news source Odaily News reported on the development on Friday, indicating that the report, titled “Identification of the Property Attributes of Virtual Currency and Disposal of Property Involved in the Case,” explicitly recognized the economic attributes of virtual assets, leading to their classification as property.This declaration is particularly significant in light of China’s sweeping ban on decentralized cryptocurrencies. Despite this ban, the report argues that virtual assets held by individuals should enjoy legal protection within the existing policy framework.Furthermore, the report proposed recommendations for addressing crimes involving virtual assets. It emphasized that in cases where money and property are involved, confiscation should be based on the integration of criminal and civil law. The approach taken aims to strike a balance between safeguarding personal property rights while also addressing broader social and public interests.Contentious approach to cryptoWhile China has been making every effort to promote its central bank digital currency (CBDC) and the development of blockchain and metaverse-related technology within the country, its stance on decentralized cryptocurrencies has been contentious at best.Its approach in that respect has been marked by a blanket ban on crypto-related activities such as mining and trading and the prohibition of foreign crypto exchanges from serving customers within mainland China. Nevertheless, Chinese courts have consistently taken a more nuanced view without necessarily contradicting the government’s approach.Differing interpretationsThe divergence between national policy and court rulings first emerged in 2019 when the Hangzhou Internet Court found that Bitcoin is a form of virtual property, and on that basis, it is safeguarded by the law from the point of view of property rights. In May 2022, a Shanghai court affirmed that Bitcoin qualifies as virtual property and, as such, falls under the purview of property rights.Global issueIt’s not just the Chinese courts that are grappling with the issue of clarifying property rights relative to virtual assets. In April of this year, a case in Hong Kong involving defunct crypto exchange Gatecoin resulted in the courts determining that cryptocurrency is property and that on that basis, it’s “capable of being held in trust.”In July a Singaporean court determined that cryptocurrency is capable of being held in trust and on that basis, it should be recognized as property. Earlier this year, the High Court of Justice in London recognized non-fungible tokens (NFTs) as property.The report from the People’s Court reaffirms the legal status of virtual assets as protected property under Chinese law. This development highlights the ongoing divergence between China’s regulatory policy and the judicial interpretation of virtual assets, signaling a potential evolution in the country’s approach to cryptocurrencies.

Gemini to Invest $24M as Part of India Expansion PlansUS-headquartered crypto exchange platform Gemini is exploring further operational expansion abroad, turning its attention specifically right now to India.The company first forayed into the world’s most populous country back in April with the announcement of the imminent launch of an engineering center.Having tested the waters in the South Asian country, the crypto exchange has decided to broaden its presence in the nation, according to a blog post published to the firm’s website on Tuesday. With a capital influx of Rs. 200 crore ($24 million), the exchange will be growing its development center in Gurgaon, a city that serves as an integral part of India’s National Capital Region (NCR).Photo by Naveed Ahmed on Unsplash70-member Gurgaon teamGemini has already onboarded over 70 staff members to its Gurgaon team. The company is actively hiring for more roles to fill its internal verticals, including tech development, finance, and compliance. In the next two years, the exchange plans to invest up to Rs. 200 crore ($24 million) in its Gurgaon facility, demonstrating a significant commitment where the Indian market is concerned.In an official statement, the company stated:“India has long been regarded as a hub for bar-raising talent by the world’s top technology companies, and we are thrilled to share that we are deepening our investment in the country. We are delighted to build on that announcement and reveal that we have opened our office within the Cyber Hub at Campus Cyber Greens.”The business is looking to tap into India’s rich pool of engineering talent to bolster its ecosystem with fresh Web3 solutions, inclusive of resource allocation towards optimized platform security.Singapore expansionPravjit Tiwana had previously been welcomed on board as the CEO of Gemini’s Asia-Pacific (APAC) operations earlier this year. He was previously the global chief technology officer (CTO) at the crypto exchange. Alongside this expansion, the company’s previous announcement in June to expand operations in Singapore is a task that also falls within Tiwana’s remit. At the time, the firm expressed the view that the APAC market will be crucial in securing the next phase of growth for the enterprise.Gemini signaled back in June that it intended to expand its reach in the Middle East also by pursuing a trading license in the United Arab Emirates.“India is undoubtedly a leading global hub for entrepreneurship and technological development. We are thrilled to build Gemini’s presence in India as we continue on our mission to unlock the next era of financial, creative, and personal freedom with crypto and Web3 innovation,” Gemini’s blog added, praising the ‘Startup India’ initiative.Growing interest in Indian marketPreviously, other crypto platforms like Coinbase and Algorand have also shown interest in onboarding software talent from India onto their teams. Amid the backdrop of India coming closer to possibly getting a concrete set of crypto rules around December this year, other crypto firms have also stepped into the market.In June, Gibraltar-based crypto-friendly bank Xapo announced its entrance into the Indian market. The OKX crypto exchange based in Seychelles is also scheduling a full-fledged expansion into the country.