Korean Crypto Wallet Joins Forces with Kick Scooter Sharing Platform

News emanating from the Central Asian republics of Kyrgyzstan and Kazakhstan in recent days points to further rollout and development of cryptocurrency sector infrastructure. A press release published on March 26 outlined that Kyrgyzstan is working on various initiatives in order to copper-fasten its position as a regional crypto hub. Those efforts include the advancement of digital asset regulation, enabling the launch of licensed crypto platforms and ongoing trials of legal frameworks relative to crypto. Photo by Steve Johnson on UnsplashA7A5 stablecoinOne initiative that may aid in the development of the digital assets sector in Kyrgyzstan is the rollout of the A7A5 stablecoin. A7A5 is pegged to the Russian ruble, with the token having been issued by Kyrgyz company Old Vector. The product was first launched in February, with the intention for it to be used on the A7 cross-border payment platform of Russian state-owned bank Promsvyazbank. Garantex, a Russian crypto exchange which had been sanctioned by U.S. and European authorities and was recently shut down, announced on Feb. 19 the listing of the A7A5 stablecoin. The stablecoin’s backers claim that it was issued “in complete accordance with the new national legislation - under the control of regulatory authorities and directed to an officially registered, regulated broker.” The stablecoin is being promoted on the basis of an annual yield of up to 20%, which has been established due to its link to the refinancing rate of the central bank of the Russian Federation. Kazakhstan crypto bank proposalMeanwhile, lawmakers in Central Asian neighbor Kazakhstan have proposed the creation of a national crypto bank. According to The Times of Central Asia, an English-language daily newspaper, Azat Peruashev, leader of the Ak Zhol political party within Kazakhstan’s lower house of parliament, put forward the proposal, which would implicate the involvement of the National Bank of Kazakhstan and a number of the country’s commercial banks. Peruashev addressed the proposal to Kazakhstani Prime Minister Olzhas Bektenov. However, the Central Asian country may have some fundamental issues to address before a crypto bank can become a reality. Currently, Kazakhstan has yet to establish a legal framework for the use of digital assets.  Last year, the authorities shut down 36 cryptocurrency exchanges which were deemed to have been operating illegally. In total, 3,500 illegal crypto exchanges have been shut down in Kazakhstan. Leading American crypto exchange business Coinbase faced a setback in the Central Asian country in November 2023 when the government cut access to its website within the country. While these crypto businesses have struggled to operate in Kazakhstan, Binance Kazakhstan successfully obtained a trading license from the Astana Financial Services Authority (AFSA) in September of last year. Earlier this month, the company added options trading and futures copy trading to the platform. Blockchain industry pioneer Kyle Chasse took to X to report on this most recent development. He suggested that given that 90% of crypto activity in Kazakhstan is off the books, the authorities are interested in launching a crypto bank so as to bring it all under their control. 

The Hong Kong Monetary Authority (HKMA) has outlined that it has established a community initiative relative to its recently launched Project Ensemble tokenization market development effort. 'Project Ensemble Architecture Community'In a press release on May 7, the Hong Kong regulator set out the establishment of the “Project Ensemble Architecture Community.” Project Ensemble was launched two months ago on March 7. At the time, the regulator described the project as “a new wholesale central bank digital currency (wCBDC) project to render support to the development of the tokenisation market in Hong Kong.” The HKMA is trying to create an environment in which it can “develop standards” for the emerging tokenization market, with particular emphasis on the use of a wholesale central bank digital currency (wCBDC). The Chinese autonomous territory’s central bank has launched the “Project Ensemble Architecture Community,” with a view towards supporting interoperability between a wholesale CBDC, tokenized money and tokenized assets. The HKMA has outlined the community's primary objective, stating it aims to provide recommendations on various topics, with initial emphasis on devising a mechanism to facilitate seamless interbank settlement of tokenized deposits through wCBDC for tokenized asset transactions.Photo by Jimmy Chan on PexelsPublic and private sector participantsFurthermore, the working group intends to support the design and execution of Project Ensemble. Notable participants in the "Architecture Community" include the HKMA itself, Hong Kong’s other financial regulator, the Securities and Futures Commission (SFC), the BIS Innovation Hub Hong Kong Centre, the CBDC Expert Group and seven private sector entities.  Among these are Bank of China (Hong Kong), Hang Seng Bank, HSBC, Standard Chartered Hong Kong, HashKey Group, Ant Digital Technologies and Microsoft Hong Kong. Hashkey Group owns one of two Hong Kong-regulated cryptocurrency exchanges, HashKey Exchange. It also runs a brokerage, asset manager and tokenization platform, amongst other entities. Ant was recently involved in a tokenized deposit trial with HSBC. Regulatory sandboxOne of the first matters on the agenda for the newly-formed Community is to make recommendations about using a wCBDC for interbank settlement of tokenized deposits. Following that, the project plans to work towards the design and implementation of the Project Ensemble Sandbox which will launch in the coming months. The HKMA has been actively testing its CBDC and commenced the second phase of the e-HKD pilot in March. This phase of the pilot program is slated to extend until mid-2025. The journey towards exploring CBDCs in Hong Kong dates back to 2017, with the authorities intensifying their focus on researching a potential e-HKD in 2021, spanning both wholesale and retail levels. With the participation of key stakeholders from both the public and private sectors, including leading financial institutions and technology firms, the initiative appears to be well-positioned to drive innovation and address the evolving needs of the financial industry in Hong Kong.

US DOJ Charges Two Russians With Mt. Gox HackTwo Russian nationals have been charged by the US Department of Justice (DOJ) for their involvement in hacking of the Japanese cryptocurrency exchange Mt. Gox, and in causing the collapse of the infamous exchange.Photo by Tingey Injury Law Firm on UnsplashCulpable for collapseThe indictment, which has been unsealed, was originally filed on June 7, and identifies the individuals as Alexey Bilyuchenko, 43, and Aleksandr Verner, 29. They are accused of not only hacking the exchange but also conspiring to launder approximately 647,000 bitcoins, which is valued at around $17.1 billion based on Bitcoin’s unit price on Friday.Additionally, Bilyuchenko has been charged with collaborating with Alexander Vinnik to operate the illicit exchange known as BTC-e between 2011 and 2017. BTC-e was shut down by U.S. law enforcement in 2017, and Vinnik was later extradited from Greece to the U.S. in 2022 on charges of running BTC-e and engaging in money laundering.Mt. Gox, which experienced a major theft, declared bankruptcy and closed its operations in 2014. Bilyuchenko and Verner played a significant role in the theft, leading to the exchange’s insolvency, according to Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division. The indictment states that “in or about September 2011, [the defendants] and their co-conspirators gained and caused others to gain unauthorized access to the Mt. Gox server in Japan.”BTC-e exchange money launderingFurthermore, it is alleged that Bilyuchenko utilized his ill-gotten gains from the Mt. Gox theft to establish the BTC-e exchange, which facilitated global money laundering activities for criminals. US Attorney Ismail J. Ramsey for the Northern District of California stated that Bilyuchenko and his co-conspirators operated a digital currency exchange that enabled criminal entities, including hackers, ransomware actors, narcotics rings, and corrupt officials, to launder billions of dollars.In March, there were reports from CoinDesk about movements of BTC-e funds on the blockchain. An exchange wallet linked to BTC-e made its first transaction since 2017, transferring approximately 3,299 bitcoins to a crypto wallet in November 2022. Additionally, six years ago, the exchange wallet sent around 10,000 bitcoins to two unidentified recipients. However, the recent DOJ filing does not specify whether these recipients were Bilyuchenko and Verner.Slow processMeanwhile, the long-suffering creditors of the hacked exchange are only beginning to reach the final stages of the bankruptcy process. Japan’s bankruptcy process is incredibly slow and it’s taken the best part of ten years for it to reach the distribution phase. It became apparent in April that the bankruptcy estate was moving to distribute $4.5 billion in cash and digital assets to creditors. It’s understood that the process will be completed in October.While creditors are taking a haircut in bitcoin terms, on a US dollar basis, they are not fairing out badly given that the leading cryptocurrency has seen massive dollar price appreciation in the intervening years.