Exploring the motivations behind Crescendo’s multi-million dollar investment in LINE NEXT

Illicit Crypto Activities Estimated to Have Surpassed $100 Billion in S.E. AsiaA recent analysis by blockchain analytics firm Bitrace has found that over $100 billion worth of digital currency has been used in illicit crypto trading activities in Southeast Asia.Photo by Bermix Studio on UnsplashThe firm provided details of its analysis via X (formerly Twitter) on Monday. The data underscores the extensive scope of unlawful activities involving cryptocurrencies across Southeast Asia. The analysis further revealed that illicit activities involve fraudulent schemes, online gambling, and money laundering.Misuse of digital asset innovationSome of the key characteristics of digital assets include the ability to maintain anonymity, decentralization, and borderless transactions, which are generally considered positive attributes. However, the very nature of decentralized cryptocurrency means that nobody dictates who uses it or the purpose for which someone decides to use it. With that, these characteristics have rendered illegal undertakings not only more covert but also facilitated expedited transfers of pilfered resources.The silver lining, however, rests in the inherent transparency of blockchain ledgers. This quality has enabled Bitrace’s team of encryption analysts to trace funds implicated in illicit ventures through intensive on-chain analysis.Key insightsThe Bitrace research points towards the following key insights:Prevalence of Tether (USDT): The use of USDT has gained prominence in both illicit activities and gambling operations throughout Southeast Asia, with a staggering sum of over 115 billion USDT recorded in 2022 alone.Shift to Top Trading Platforms: USDT is observed to migrate from unlawful platforms within Southeast Asia towards top-tier trading platforms. Particularly favored by operators and gamblers, a significant proportion hails from the Chinese demographic, consistently gravitating towards specific exchanges.Inflow into Trading Platforms: A noteworthy development emerges as over 14.6 billion USDT prepares to traverse into trading platform accounts. The mounting risk factor diffuses across an expanding spectrum of addresses and platforms.Likely consequencesIf this blockchain analysis is found to be accurate, there are likely to be ramifications for all projects operating in the digital assets, DeFi and Web3 space. It comes at a time when the focus on the regulation of crypto-related businesses is more intense than ever before.Anti-Money Laundering (AML) and Know Your Transaction (KYT) legislation are cornerstone financial services regulations that have been established on a global basis. If these regulations are being flouted, and crypto is being used as a means to circumvent them, there’s a real risk that regulation could be applied heavy-handedly to counteract that threat of widespread illicit activity.Global crypto exchange Binance has faced criticism in this context, with a suggestion in March that its Turkey-based exchange service had been used by an organization connected with militant group Hamas for money laundering and terrorist financing.In a report last week, Binance claimed that it shared information with authorities that led to the capture of senior ISIS members. More such cooperation will likely be necessary to prevent the sector being subject to overzealous regulation.

While Indonesia has been recognized as one of the world's swiftest embracers of cryptocurrencies, it has faced a notable setback more recently, with a 60% decline in transaction volumes on local exchanges compared to the preceding year. High taxesIn a recent report by CoinDesk Indonesia, the publication speculates that the imposition of high taxes may be a pivotal factor dissuading traders and impacting the overall market dynamics. Indonesia’s tax system treats crypto assets as commodities, with the burdensome taxes arising as a direct consequence of that classification. The tax framework in Indonesia subjects crypto assets to both income tax and value-added tax (VAT), treating them akin to commodities. Leading crypto exchanges in the country reveal that the cumulative tax load on each transaction could surpass the trading fees imposed by exchanges, potentially discouraging users from engaging in crypto transactions. Oscar Darmawan, the CEO of the leading Indonesian crypto exchange INDODAX, told CoinDesk that users bear an income tax of 0.1% and a VAT of 0.11% on every crypto transaction. Additionally, exchanges are required to remit a 0.04% fee to the recently established national crypto bourse. Darmawan clarified that “this places a significant financial burden on the domestic crypto industry." expresses Darmawan in an interview with CoinDesk Indonesia, underscoring the challenges faced by the industry due to the current tax structure.Photo by Nataliya Vaitkevich on PexelsAn international issueThe tax treatment of digital assets has been a bugbear for the crypto space on an international basis. In Japan, it arose last month that the country’s lawmakers were considering applying an exemption for companies from paying taxes on unrealized cryptocurrency gains. It has since transpired that such an amendment will be applied to its fiscal 2024 tax reform plan. India has applied a heavy tax burden where crypto is concerned, with a 30% tax applied to capital gains relative to the sale of crypto assets. Additionally, 1% taxation applies by way of a tax deducted at source (TDS) on crypto transactions. The use of cryptocurrency for the purchase of goods and services in the United States remains a stumbling block, given that the current tax code treats such a scenario as a taxable event. Last year, two U.S. senators attempted to address that issue, by including a $200 exemption for purchases made with cryptocurrency. Calls for crypto asset reclassificationIn response to this dilemma in Indonesia, some stakeholders within the local crypto industry advocate for a paradigm shift in the classification of crypto assets. They propose treating crypto as securities instead of commodities, anticipating that this alteration could alleviate the tax burden on users. Yudhono Rawis, the CEO of the exchange platform Tokocrypto, asserts: "Both stocks and crypto are tradable assets with profit potential … Thus, implementing the same tax regime for both these investment instruments would be more equitable and consistent." The industry anticipates regulatory changes in the near future, as crypto oversight in Indonesia is set to transition from the commodities regulator to the Financial Services Authority (OJK) in January 2025.  

Chinese Nationals Detained in Crypto Mining Clampdown in LibyaAuthorities in Libya have detained 50 Chinese nationals suspected of involvement in an illicit crypto mining operation in Zliten, a city located 160 kilometers east of the Libyan capital of Tripoli.The attorney general’s office in Libya made the announcement on Friday, revealing that the individuals were caught operating a cryptocurrency mining farm within an abandoned iron factory.Photo by Dmitry Demidko on UnsplashMining operation dismantledPhotos and videos released by the office of Attorney General Siddiq Al-Sour showcased the dismantling process of the extensive mining systems discovered in Zliten.This is not the first instance of Chinese miners being detained for crypto mining activities in the North African country. The development follows the recent arrest of ten other Chinese nationals in the city of Misrata on the Mediterranean coast, as well as at two sites within the capital, Tripoli. The individuals were apprehended on Wednesday while being caught “red-handed” with numerous powerful equipment used for intricate proof of work (PoW) mining calculations. The mining rigs were subsequently confiscated by the attorney general’s office.Mining banDespite the official ban on cryptocurrency mining in the country, Libya has witnessed a high prevalence of such activities, with the nation recording the highest percentage of cryptocurrency mining across the African continent in 2021. It is estimated that Libya accounted for approximately 0.6 percent of global Bitcoin production during that year.Libya’s appeal as a destination for cryptocurrency mining stems from its low electricity costs, which stand at a remarkably low rate of $0.004 per kilowatt hour. This cost is approximately 40 times cheaper than in the United States, making Libya an attractive location for miners.While energy may be cheap, the increased demand for electricity that crypto mining brings puts a strain on what was an already vulnerable power grid in the country. That has resulted in frequent and lengthy power blackouts, particularly during the summer months.A lack of oversight has also encouraged an influx of Chinese miners, albeit with these recent arrests, it appears that the Libyan authorities are stepping up the level of oversight and enforcement. The vast majority of Bitcoin miners were based in China up until a mining ban was enforced in 2021.Global issueThat event led to an exodus of miners internationally. Some established themselves legally in the United States and elsewhere. The first casualty of illegal mining was Kazakhstan. The sudden arrival of miners led to its power grid coming under pressure. As a consequence, the Central Asian country clamped down on the activity, and later regulated it.In response to these illegal activities, Libyan authorities have intensified their efforts to combat cryptocurrency mining operations. They are conducting investigations into alleged mining sites in Tripoli and Misrata, aiming to curtail these activities and mitigate the strain on the country’s electricity infrastructure.The recent arrests highlight the ongoing challenges associated with illegal mining activities in jurisdictions globally where cheap energy can be exploited, giving rise to the need for enhanced regulatory measures to address these issues.