Thailand Pushes Back Against Facebook-Enabled Crypto Scams

Seoul prosecutors charge eight suspects linked to crypto price manipulationEight individuals involved in a cryptocurrency fraud, which is separate from a murder case associated with the same token, have been formally charged and referred to court by public prosecutors in South Korea.The Joint Virtual Asset Crime Investigation Unit of the Seoul Southern Prosecutors’ Office has recently disclosed the arrest of two key figures in the scandal related to a cryptocurrency called Puriever (PURE). The unit apprehended the chief executive of the PURE issuer, referred to as “A” for anonymity, and a market manipulator. Both have been charged with fraud. In addition to these arrests, the prosecution has charged six other individuals–including an executive from a cryptocurrency consulting firm, anonymously named “C,” and a broker. These additional suspects have been charged but not arrested.Photo by Adam Śmigielski on Unsplash$16 million from over 6,000 victimsThe prosecution has accused the suspects involved in the PURE case of illicitly inflating the token’s price through deceptive disclosures and market manipulation during April and May 2021. This scheme reportedly enabled them to amass illegal profits totaling KRW 21 billion (close to $16 million) from approximately 6,100 victims. In March of this year, it came to light that the PURE was at the center of a series of criminal activities, including kidnapping and theft, which ultimately led to a murder in Gangnam, Seoul.The prosecution has uncovered that “A” and “C,” key figures in the PURE scandal, transferred 55.2 million PURE to a partner company under the guise of an initiative to reduce air pollution, as falsely stated in their disclosure. The suspects reportedly employed a skilled manipulator to inflate the token’s price artificially. Once the price peaked, they sold off the tokens, capitalizing on the artificially inflated value.Circulation supply manipulationThe case reveals a collective scheme orchestrated by a token issuer, a consulting entity, a broker, and an experienced market manipulator. A key tactic in their scheme involved locking their cryptocurrency wallet to artificially limit the token’s circulation supply. Furthermore, these fraudsters employed a bot to perform wash trading, which boosted the daily trading volume of the token. This strategy created a false impression of high demand and activity in the market.A representative from the prosecution emphasized that the cryptocurrency market is more susceptible to manipulation than the stock market. This vulnerability is attributed to the lack of a monitoring and supervision system in the crypto sector, despite its speculative nature. In response to these challenges, the prosecution has expressed a firm commitment to enhancing its crypto investigation capabilities with the goal of effectively combating criminal activities. These efforts are aimed at fostering a fair and transparent trading environment, safeguarding the integrity of the cryptocurrency market.

Taiwan to Restrict Offshore Non-Complaint ExchangesTaiwan’s Financial Supervisory Commission (FSC) has been working towards taking proactive steps to regulate the cryptocurrency industry within its borders recently. One key guiding principle it has developed is to impose strict regulation on offshore crypto exchanges operating in Taiwan.Photo by Vas on UnsplashTen guiding principlesTaiwan’s Central News Agency reported on Thursday that in an effort to ensure compliance and protect consumers, the FSC has developed ten guiding principles for virtual asset service providers (VASPs). These principles are set to be officially released by the end of this month, according to a government official.The guiding principles will encompass several important aspects of the crypto industry. They will emphasize the need for enhanced information disclosure, requiring businesses to establish clear review standards for the listing and delisting of virtual assets. Additionally, there will be a focus on ensuring the separation and proper custody of assets belonging to both companies and customers.Focusing on offshore complianceThe FSC intends to make it clear that offshore crypto exchanges must adhere to proper compliance registration if they want to conduct business onshore. The move is in line with what appears to be a commitment by the Taiwanese authorities to promote responsible and secure cryptocurrency operations.One particularly significant restriction is the prohibition of illegal solicitation of business by foreign crypto firms. The FSC is determined to enforce this rule strictly. Foreign VASPs that fail to register according to company law and declare their compliance with anti-money laundering regulations to the FSC will be barred from soliciting business in Taiwan or catering to domestic residents.It’s worth noting that Taiwan has been proactive in implementing anti-money laundering laws for VASPs since July 2021. Although this particular measure has been in place, the cryptocurrency industry in Taiwan has largely operated in a regulatory vacuum. However, recent developments suggest a shift towards greater oversight and accountability.One notable example is Binance, the world’s largest cryptocurrency exchange, which has initiated the process of registering for anti-money laundering compliance in Taiwan. Despite not being fully regulated in the country, Binance has established a local entity, “Binance International Limited Taiwan Branch (Seychelles),” and received government approval for company registration.Building a regulatory frameworkIn addition to these regulatory efforts, the Ministry of Economic Affairs has proposed the creation of a new business category within relevant regulations. This move aims to facilitate the formation of cryptocurrency-related industry associations, encouraging the development of self-regulatory guidelines.The forthcoming guiding principles for VASPs are expected to provide much-needed clarity and structure to the rapidly evolving world of cryptocurrencies within Taiwan’s borders.Many leading jurisdictions have been behind the curve in developing a clear, workable regulatory framework for crypto. That has led to many exchanges establishing themselves in offshore locations where light touch regulation is applied. It’s highly likely that the Taiwanese have examined the fallout from this development, best exemplified by the spectacular collapse of Bahamas-based FTX last November.

Banking Difficulties Remain in Hong Kong for Crypto Start-UpsWhile Hong Kong has demonstrated a very clear crypto-friendly stance over the course of the past six months, crypto start-ups are still struggling with banking in the Chinese autonomous territory.Photo by Manson Yim on UnsplashLicensing backlogAll the signs are that Hong Kong is striving to develop itself as a regional hub for crypto and blockchain related business. Encouraged by that stance, against a background of the United States becoming openly hostile to crypto over that very same time frame, applications are streaming in from international firms to be licensed to operate their businesses in the city.In discussion with crypto start-up applicants, CoinDesk has established that the issue extends to firms that have already obtained a license to operate. To compound matters, the Hong Kong regulator, the Securities and Futures Commission (SFC), has a shortage of manpower, with just eight officials currently working on the applications of eighty crypto firms.Speaking to that backlog, Amy Yu, APAC CEO for Swiss crypto financial services company, SEBA Bank, stated: “This probably would have been a different story six or nine months ago.”A known problemIt appears that both the SFC and its regulatory peer, the Hong Kong Monetary Authority (HKMA) were aware of the issue and tried to get out ahead of it. Late last month, both regulators convened a meeting with bank officials and virtual asset service providers (VASPs).The objective was to try to forge a path forward such that banks could amend their approach, enabling greater facilitation and acceptance of crypto businesses such that the banks would be more inclined to approve bank account applications from those fledgling businesses.Arthur Yuen, Deputy CEO of the HKMA addressed the matter in a blog post published to the regulator’s website on April 27. Yuen was clear in calling on the banks to enable banking for VASPs:“With the implementation of the regulatory regime for VA [virtual assets] activities in Hong Kong and the strengthening of supervisory regimes in different jurisdictions according to the international standards, and as the banking industry develops a better understanding of the VA industry over time, we expect that regulated virtual asset service providers (VASPs) will be able to successfully apply for a bank account through a reasonable process.”Banker resistanceElaborating on the matter further, it’s clear that Yuen and his colleagues understand the importance of banking in enabling this nascent business sector such that the broader strategy of a pro-crypto business environment is affected in Hong Kong. “To attract businesses from new markets, it is crucial to have high quality financial services, while enhancing corporate access to bank accounts would be one of the key priorities,”he stated.An attendee at that regulator-organized round-table last month said that “It was more like a wish list from the regulator,” and that “whether the banks fully embrace it is another matter.” The issue remains as a major impediment to the ability of crypto start-up companies to operate, Some are being forced to try and work around the stumbling block, relying instead on overseas banking partners.