FPG Halts Withdrawals Following Hack

Korean Supreme Court acquits Dunamu Chairman Song Chi-hyungThe Supreme Court of South Korea, in a significant ruling on Thursday (local time), acquitted Song Chi-hyung, chairman and principal stakeholder of Dunamu, of fraud and forgery charges, according to a report by local news agency Yonhap. This ruling is particularly noteworthy because Dunamu is the operator of the nation’s largest cryptocurrency exchange, Upbit.This decision, led by Justice Oh Kyung-mi, marks the culmination of a legal battle that began with Song’s indictment in Dec. 2018, and it extends to the acquittal of the company’s Chief Financial Officer (CFO) and the head of the Data Value Team, who were jointly indicted.Photo by Tingey Injury Law Firm on UnsplashBackground of the caseSong Chi-hyung and his colleagues were alleged to have fabricated an account on Upbit between September and November 2017. They had been accused of feigning the deposit of assets valued at KRW 122.1 billion and then employing these fictitious funds to enable transactions among actual members.The prosecution also leveled fraud charges against them, claiming that the fabricated account was utilized to sell 11,550 bitcoins to 26,000 members, thereby generating KRW 149.1 billion.The Seoul Southern District Court, acting as the court of first instance, found them not guilty. The court reasoned that the evidence presented by the prosecution was insufficient to establish that the defendants actually deposited the assets in the account.Issues with the prosecution’s evidence gatheringThe Seoul High Court, serving as the appellate court, identified problems with the evidence provided by the prosecution, determining that part of it lacked credibility due to improper collection methods. Notably, the court observed that the prosecution had directed Dunamu employees to access their Amazon cloud server to download the account’s transaction history. However, since this remote server was not included in the search and seizure warrant, the court highlighted the illegitimacy of the evidence.The appellate court also pointed out another issue with the evidence: documents stored on the CFO’s USB drive. The prosecution did not follow the legitimate search process, which requires them to extract only data related to the allegations. Moreover, the prosecutors did not present a warrant when confiscating the laptop of the Data Value Team’s lead, further undermining the credibility of their evidence.The court further stated that even if the remaining evidence provided by the prosecution was considered viable, it was still insufficient to substantiate the prosecution’s accusations.The prosecution, disagreeing with the decision of the appeals court, had escalated the case to the Supreme Court. However, the highest court in the nation sided with the ruling of the appeals court, effectively upholding the decision made at the appellate level.

Hong Kong-based ZA Bank has published a “2023 in review” blog post that suggests that the virtual bank is preparing to bring virtual asset trading to retail customers through its ZA Bank App.Photo by David McBee on PexelsEmbracing retailIn the blog article which was published to its website last week, Hong Kong’s largest virtual bank expressed its dedication to bolstering Hong Kong’s aspiration to emerge as a global hub for Web3. As the city embraces a new licensing regime for virtual asset trading platforms, ZA Bank unveiled its plans to introduce fiat currency-based virtual asset trading services for retail investors through the ZA Bank App. The bank first aired the notion of such an offering back in May. Its renewed coverage of the topic would seem to suggest that such a product offering is much closer to launch. Additionally, the bank anticipates the launch of its U.S. stock trading service after obtaining necessary approvals, promising a stream of innovative and exciting services in the future. Regulatory trendNews of the bank’s proposed retail offering aligns with moves being made by local regulators over the course of recent months to enable retail access to crypto-based products within the Chinese autonomous territory. In June, a regulatory framework was put in place by the Securities and Futures Commission (SFC) to enable licensed virtual asset platforms to market to retail investors. In recent days it has emerged that regulators are prepared to accept applications for spot crypto exchange-traded fund (ETF) products which would be made available to retail investors. Banking the crypto sectorZA Bank also announced that it has been providing banking support to more than 80 Web3 companies since the beginning of this year, aligning with its commitment to “Banking for Web3,” introduced in April. Notable among the roster of supported companies is OKX Hong Kong, with ZA Bank serving as the trusted banking partner for locally licensed virtual asset trading platforms (VATPs) such as HashKey and OSL. The bank, which was established by ZhongAn Online and Beststar in 2018, has served an important banking role in respect of the digital assets sector in Hong Kong in 2023. While the authorities in Hong Kong appear to have pulled out all of the stops over the course of the past year to nurture crypto business, banking was identified as an area of difficulty. In June, the Hong Kong Monetary Authority (HKMA) explicitly questioned the reluctance of some major banks to extend services to crypto companies, applying pressure on them to do so. Given that background, ZA Bank, being a first mover in embracing the industry, has played an important role in Hong Kong. ZA Bank’s impact is evident in its notable market presence, with one in 10 Hong Kong adults choosing the institution for their banking needs. The ZA Bank App earned the distinction of being the highest-rated banking app on Hong Kong’s Google Play in 2023. The bank has surpassed HKD 10 billion in customer deposits and secured the top spot in Asia in the Sia Partners 2023 International Mobile Banking Benchmark, maintaining the sixth position globally. 

3AC Founder Secures Restraining Order in SingaporeSu Zhu, the Co-Founder of the defunct crypto hedge fund Three Arrows Capital (3AC) has successfully obtained a restraining order against BitMEX Co-Founder and former CEO, Arthur Hayes, in a Singaporean court.Photo by Monstera on PexelsNo communication “by any means”Crypto publication CoinDesk stated on Wednesday that it had seen a copy of the court order, which was originally issued on May 5. According to the details of the order, Hayes is prohibited from “making any threatening, abusive or insulting communication that would cause the Applicant harassment, alarm or distress.”Additionally, the former CEO of crypto trading platform BitMEX is forbidden from using “threatening, abusive or insulting words” in relation to Su Zhu. The order, which was issued by Judge Sandra Looi Ai Lin, clarifies that the BitMEX Co-Founder is not permitted to publish “any identity information” relative to Zhu or to communicate with him “by any means.”$6 million owedIt’s an understatement to say that Zhu, alongside fellow 3AC founder Kyle Davies, are not on Hayes’ list of favorite people in recent times. Following the 3AC collapse, Hayes has maintained that he is owed $6 million by the duo. Since the collapse of the hedge fund, Hayes has been tweeting out at the pair, calling them out relative to his claim that the duo have a debt obligation to him to the tune of $6 million.While both Hayes and Zhu have blemishes on their records, Hayes is much better regarded within the crypto community than Zhu. The BitMEX Co-Founder narrowly avoided a prison sentence in 2022 with the much lesser sanction of six months home detention being applied. That arose due to federal charges brought against him on the basis that he didn’t implement anti money laundering (AML) compliance procedures and checks at BitMEX while he was CEO of the firm.Despite this failure, Hayes remains popular within the crypto space, with his insightful commentary being lauded given that since he left BitMEX he has taken to writing blog articles relative to crypto and the broader economic situation. However, blog site Medium has taken to disabling access to his most recent blog article. The blog page states that the post “is under investigation or was found in violation of the Medium Rules.”Lacking a welcomeIn contrast with Hayes, commentary relative to the 3AC duo of Zhu and Davies has lacked warmth. Neither of the duo had jumped on social media for a number of months following the collapse of 3AC. More recently they have both tried to rehabilitate themselves, with many commentators within the space seeing it as a cynical move.In February the duo launched Open Exchange, more commonly known as OPNX, a trading platform for crypto-related bankruptcy claims. At that time, Hayes tweeted out that he interpreted the news as the return of the crypto bull market.Earlier this month, OPNX claimed that it had the backing of several credible entities in the crypto space. However, immediately afterwards, a number of those firms clarified that they had nothing to do with the startup.Meanwhile, crypto-focused venture capital investor Michael Arrington tweeted out his disdain in relation to the 3AC founder’s successful fund raise:“Three f***ing arrows dip****s successfully raising a new fund is the saddest bulls**t I’ve heard in a long time.”The regulator in Dubai has also failed to roll out the red carpet for the duo’s new venture. In April, it issued an investor alert in relation to OPNX. Subsequently, it has followed up with a formal written reprimand issued to Zhu and Davies, given that the business is not registered with the regulator although operating out of Dubai.