Myanmar Government in Exile Backs Crypto Bank Launch

Dunamu Loses Lawsuit Seeking $19M in Corporate Tax Refunds After Venture Status RemovalDunamu, the operator of South Korea’s largest cryptocurrency exchange Upbit, lost a 24.8-billion-won (approximately $18.7 million) corporate tax lawsuit, according to local news outlet The Korea Economic Daily. This legal action emerged after Dunamu was removed from the list of registered venture firms in December 2018. The Seoul Administrative Court ruled that since Dunamu was no longer a venture, it was not eligible for the associated tax benefits.Photo by Tingey Injury Law Firm on UnsplashLosing venture statusIn September 2017, Dunamu obtained certification as a venture company from the Ministry of SMEs and Startups. However, this certification was revoked in December of the following year. This revocation was due to an amendment to the Enforcement Decree of the Venture Businesses Act in October 2018, which resulted in the exclusion of “blockchain-based crypto asset trading and brokerage” from the venture business classification. Consequently, the withdrawal of this certification rendered the company ineligible for government tax incentives.Tax refund request deniedIn August 2020, Dunamu took action by formally requesting a refund of KRW 24.8 billion in taxes previously paid to the tax office. The foundation of its claim rested on its entitlement to venture company tax benefits up until the corporate tax period of 2018. However, its request was turned down, leading Dunamu to escalate the matter by initiating an administrative case against the tax authorities, following an unfavorable decision by the Korean Tax Tribunal.Meanwhile, an amended version of the Act on Special Cases Concerning Taxation Restrictions, which excluded cryptocurrency-related industries from benefiting from tax reductions, went into effect in January 2019. Pointing to the effective date of this act, Dunamu argued that the company should be entitled to benefits applicable up until the corporate tax cycle of 2018. Furthermore, Dunamu highlighted its legal action, which had led the administrative court to suspend the effects of the venture company certification revocation from December 31, 2018, to January 18, 2019.Court’s stanceDespite these arguments, the court rejected Dunamu’s argument and upheld that tax relief could not be granted for the tax year encompassing the date of the removal of its venture status. Additionally, the court affirmed that the tax authorities’ decision was valid since the venture status had been revoked in 2018, regardless of the amended Taxation Act’s implementation.In disagreement with the court’s ruling, Dunamu has filed an appeal against the decision.

SEC Opposes Motion to Dismiss Terraform Labs LawsuitLawyers representing the United States Securities and Exchange Commission (SEC) have responded to a motion to dismiss the lawsuit filed by Dentons, the lawyers representing Singapore-based Terraform Labs and its Founder Do Kwon.Photo by Miguel Á. Padriñán on PexelsCourt filingAccording to its arguments, set out in a court filing lodged to the District Court of the Southern District of New York on Thursday, the SEC’s counsel claims that the additional documents provided by Dentons lack sufficient grounds for dismissing the case.It claims that the internal SEC emails presented by Dentons are irrelevant to the current lawsuit. The SEC asserts that the parameters of an “investment contract” are clearly defined by the Howey test and argue that TerraUSD ($UST) should be classified as a security.The reliance by US regulators on the Howey test, a legal test case that implicated citrus grove contracts that date back to 1946, has proven to be controversial. Naturally, there could have been no consideration of the digital innovation that digital assets present today almost eighty years ago. Notwithstanding that, the SEC maintains that the principle factors of what constitutes an investment contract are covered by the case regardless.During the court hearing held on June 15, Dentons submitted supplementary documents to strengthen their motion to dismiss the lawsuit. The primary focus of the hearing was to determine whether the digital assets developed by Terraform Labs should be categorized as securities based on the criteria of an “investment contract.”Dentons maintains that the algorithmic stablecoin, $UST, should not be considered a security and emphasizes its practical purpose rather than its classification as an investment contract. To support their motion, Dentons included additional documents such as the US House Financial Services Committee hearing on digital asset regulation and stablecoin issuance, the SEC’s request for a restraining order against Binance.US, and the Hinman emails from the SEC vs. Ripple lawsuit.Judge to decideThe defense lawyers highlighted what they perceive as a “regulatory gap” in classifying crypto assets as securities, particularly as the US Congress engages in discussions about regulatory frameworks for digital assets and stablecoin issuance. Furthermore, they argued that the SEC is exceeding the scope of securities laws and relying on internal emails related to “investment contracts” to determine the security status.A decision on the motion to dismiss will be arrived at by July 14. Judge Jed Rakoff, who is presiding over the case, will be responsible for that, once he’s weighed up the merits of the arguments presented by both parties.It is noteworthy that Dentons has previously represented Kwon in challenging the US SEC’s subpoena during the investigation of the Mirror Protocol in 2021, as well as in a class-action lawsuit in the Singapore High Court in 2022. The law firm also provides representation to Terraform Labs in other legal matters.In a separate development, the Basic Court in Podgorica, Montenegro, has granted bail for Kwon and former Terra Chief Technology Officer Han Chang-joon. However, Kwon has recently been taken into custody for extradition in Montenegro while the court deliberates on South Korea’s extradition request for the Terra founder.As the legal proceedings continue, the outcome of the motion to dismiss will have significant implications for the ongoing dispute between Terraform Labs, Do Kwon, and the SEC.

JPMorgan Adopts Blockchain for 24/7 Interbank Transactions in IndiaAmerican multinational financial services company JPMorgan Chase has partnered with six major Indian banks to introduce a blockchain-based platform that leverages the technology’s benefits to address the restraints of traditional finance.Photo by Naveed Ahmed on UnsplashInterbank settlementThe collaboration aims to enable interbank settlement of US dollar transactions in India’s Gujarat International Finance Tec-City (GIFT City), positioning it as an alternative trading center to Singapore and Dubai. That’s according to a report from Bloomberg, published on Monday. The participating banks in this pioneering initiative include HDFC Bank, ICICI Bank, Axis Bank, Yes Bank, IndusInd Bank, and JPMorgan’s own banking unit at GIFT City.Onyx blockchainThe blockchain project, utilizing JPMorgan’s Onyx platform, aims to expand the capacity of the existing settlement system. Kaustubh Kulkarni, JPMorgan’s senior country officer, stated that the platform will enable the participating banks to process instant transactions 24 hours a day, seven days a week. By leveraging blockchain technology, the interbank settlement process will become faster and more efficient, overcoming the current limitations of time and availability.Onyx blockchain was established in 2020 and serves as JPMorgan’s digital assets network. It was specifically designed with interbank settlement and wholesale payment transactions in mind.Reduced settlement timeUnder the prevailing interbank settlement system, transactions could take several hours to complete, and settlement is not available on weekends or public holidays. JPMorgan’s blockchain pilot, however, will remove these barriers, as Kulkarni explained: “By leveraging blockchain technology to facilitate transactions on a 24x7 basis, processing is instantaneous and enables GIFT City banks to support their own time-zone and operating hours.”This initiative not only addresses the operational challenges of interbank settlement but also serves New Delhi’s strategic goal of positioning GIFT City as a prominent alternative trading center. With the implementation of blockchain technology, GIFT City can provide a competitive advantage by offering efficient, real-time transaction capabilities.The success of Onyx is evident, as the bank reportedly processed nearly $700 billion in short-term loan transactions through the platform as of April 2023. The utilization of Onyx for the interbank dollar transfers in India further demonstrates JPMorgan’s commitment to exploring the potential of blockchain technology in the financial sector.Positioning for de-dollarizationAdditionally, JPMorgan’s involvement in this initiative aligns with the evolving landscape of global finance. The bank’s currency strategists have highlighted signs of emerging de-dollarization, with the US dollar’s share declining in foreign exchange reserves and exports. The adoption of blockchain technology for dollar transactions not only improves efficiency but also aligns with the changing dynamics of the global financial system.As JPMorgan launches the pilot project in collaboration with the Indian banks, the coming months will be crucial for analyzing the experiences and outcomes. This initiative marks a significant step towards streamlining financial operations, embracing innovative solutions, and strengthening India’s role in the adoption of blockchain technology within its financial infrastructure.