Kazakhstan’s sovereign wealth fund to invest in crypto

Korean Experts Advocate for Global Crypto Info Exchange to Combat Tax EvasionIn a recent event held to discuss the tax regime in South Korea, law professors offered a suggestion to combat tax evasion associated with cryptocurrencies. They proposed the implementation of a global cryptocurrency information exchange system for more effective response measures.Kim Beom-jun, a professor at the University of Seoul Law School, and Kim Seok-hwan, a professor at Kangwon National University Law School, delved into this matter last Friday at the tax administration forum that took place at the Korea Federation of Small and Medium-sized Enterprises (KBIZ).Photo by Karolina Grabowska on PexelsRising crypto adoptionAccording to their report, the cryptocurrency market is currently facing challenges stemming from the Terra-Luna incident and the broader economic downturn caused by rising interest rates and inflation. However, it’s worth noting that in Korea alone, there are approximately 6.27 million cryptocurrency exchange users, with a collective market capitalization of around KRW 19.4 trillion ($14.6 billion). This suggests that cryptocurrencies continue to integrate into our everyday lives.Crypto tax starting in 2025Starting in 2025, South Korea is set to impose taxes on income from cryptocurrency trading. However, before the tax is put into effect, there is a pressing need for administrative enhancements aimed at preventing tax evasion involving cryptocurrencies. These initiatives encompass the development of crypto-tracking technology and the allocation of sufficient staff and budgets to enable tax authorities to effectively address crypto-related issues.Foreign exchanges and DeFi platformsDuring the forum, experts voiced concerns about the possibility of tax evasion through the use of overseas crypto exchanges and decentralized platforms.Tax specialists pointed out that it’s difficult to expect people to fully meet their tax obligations when they’re trading on international exchanges. They also emphasized the challenges in collecting accurate tax information from crypto users who report transactions in overseas financial accounts.OECD’s initiativeIn August 2022, the Organization for Economic Co-operation and Development (OECD) gave the greenlight to the Crypto-Asset Reporting Framework (CARF). This framework aims to standardize the reporting of tax information related to crypto-asset transactions and facilitate the automatic exchange of such information. During the forum, researchers proposed that in the future, if Korea decides to participate in the OECD’s CARF, it should not only establish a cooperative system between virtual asset service providers (VASPs) and regulatory authorities but also revisit and amend pertinent laws.Additionally, presenters at the forum underlined the necessity of obligating taxpayers to furnish essential tax information for effective virtual asset taxation. They also stressed the importance of implementing appropriate sanctions in cases where taxpayers fail to comply with these reporting requirements.Commissioner Kim Chang-ki of the National Tax Service (NTS) stated that the agency is committed to enhancing tax accountability and transparency. He added that the NTS will take strong measures against malicious tax evasion activities, especially those involving online platforms.Furthermore, Commissioner Kim mentioned that the tax agency is boosting its investigative capabilities using scientific methods to combat emerging forms of tax evasion, like those related to virtual assets. He also said the NTS is expanding its international collaboration and devising other measures.

3AC Liquidators Pursue $1.3 Billion from FoundersLiquidators appointed for Three Arrows Capital (3AC), the failed Singaporean cryptocurrency hedge fund, are seeking to recover $1.3 billion from the fund’s co-founders.That’s according to an unidentified source cited by Bloomberg in a report published on Tuesday. The requested amount represents losses incurred by the founders during the months leading up to the firm’s collapse, according to a source familiar with the liquidators’ claims.Photo by Giorgio Trovato on UnsplashLiability allegationsDuring a meeting with the hedge fund’s creditors on Tuesday, the liquidators discussed the allegations against Three Arrows co-founders Su Zhu and Kyle Davies. The co-founders are accused of causing the hedge fund to accumulate significant leverage between May and June 2022, despite already suffering substantial losses from ill-fated Luna tokens and other investments.The liquidators argue that the firm was insolvent at that time. Consequently, they have taken legal action against Zhu and Davies in a British Virgin Islands court to recover the losses on behalf of the fund’s creditors.Lawyers representing Zhu and Davies have not yet responded to requests for comment. However, in a Twitter post last June, Zhu mentioned that their attempts to cooperate with the liquidators were met with resistance.Crypto failure catalystThe failure of Three Arrows Capital coincided with a downturn in the digital currency market, impacting platforms that had exposure to the hedge fund, including crypto lenders BlockFi and Voyager Digital. These platforms subsequently filed for bankruptcy in the weeks following the liquidation of the hedge fund.The liquidators’ allegations against the co-founders represent an escalation of actions taken against Zhu and Davies, whom they have accused of non-cooperation during the investigation. The liquidators, who are partners at the consulting and advisory firm Teneo, were appointed by a British Virgin Islands court last year to recover funds for Three Arrows Capital’s creditors, who are collectively owed approximately $3.3 billion.Earlier this month, the liquidators urged a New York bankruptcy judge to impose a daily fine of $10,000 on Davies. They argue that this substantial fine is warranted because he has failed to respond to a subpoena requesting business records and other relevant information.While the liquidators do not currently know the whereabouts of Davies or Zhu, court documents from earlier this month referenced a New York Times article reporting that Davies had traveled to Bali after the collapse of Three Arrows Capital.Restraining orderIn May Zhu had secured a restraining order against BitMEX Co-Founder Arthur Hayes in a Singaporean court. Hayes believes that he is owed $6 million by the 3AC co-founders. Despite significant adverse publicity within the crypto space, the 3AC co-founders have proceeded to do business within the industry.They’ve established a crypto claims trading platform, OPNX, and alongside that Dubai-based business, they’ve also established a new venture capital fund, 3AC Ventures.The Dubai regulator, the Virtual Assets Regulatory Authority (VARA), has reprimanded OPNX and the business's founders for operating an unregistered digital assets business within the territory.

3AC liquidators estimate 46% recovery while BVI court freezes $1BThe joint liquidators of the now-defunct Singaporean crypto hedge fund Three Arrows Capital (3AC) have provided creditors with an estimated 45.74% recovery rate for their claims in the bankrupt estate. Meanwhile, in parallel proceedings in the British Virgin Islands (BVI), a court has frozen $1 billion of founders’ assets.According to The Block, the details were disclosed in a December report to creditors by joint liquidators Russell Crumpler and Christopher Farmer of Teneo, the firm appointed to oversee the liquidation of the failed business.$1.16B in assetsAs of Dec. 18, the estimated value of 3AC’s assets was reported to be $1.16 billion, while claims totaling $2.7 billion are expected to be recognized for distribution. The liquidators highlighted that settlements in litigation against various parties, including DCG, Genesis and BlockFi, increased reported assets by an estimated $292 million. It’s important to note that the BlockFi settlement is still pending approval.A total of 154 claims, valued at $3.4 billion, were filed against the 3AC estate. The report indicates that $200 million of claims were not admitted for distribution, and $322 million in claims have either been rejected or are expected to be rejected. Additionally, $76 million in claims are currently under dispute. The report reveals that initial distributions to creditors are being planned for the first quarter of the upcoming year.Illiquid tokensThe breakdown of assets reveals that a large majority are illiquid tokens, subject to vesting periods, comprising 82% of the total. Only 6% of the portfolio is liquid, while equity and investments account for 6.9% and 4.8% is in cash. These illiquid tokens, totaling $563 million at current prices, consist of 13 different tokens with vesting schedules unlocking assets over the next three years, reaching $200 million by the end of 2024.To date, the liquidators have staked some of these tokens, resulting in $5.4 million in staking rewards. Liquidation efforts, including the sale of $34.5 million worth of liquid tokens and $15 million in NFTs, along with other asset sales, have generated a total of $66 million.Photo by Kemp Fuller on UnsplashFrozen assetsIn a related development, Bloomberg reported on Thursday that a British Virgin Islands court has frozen assets totaling $1.1 billion belonging to 3AC co-founders Su Zhu and Kyle Davies, along with Davies’ wife Kelly Chen. The liquidators filed a claim for insolvent trading against the founders for $1.078 billion, with additional claims against Davies for $66 million and Chen for $4.6 million.Teneo outlined the rationale behind the move in the following statement it made to Decrypt:“The worldwide freezing order has been sought in connection with claims that are being pursued by the liquidators that allege, amongst other things, that the Founders should be held responsible for causing 3AC’s position to deteriorate by an amount that is equivalent to the value of the freezing orders sought.”Su Zhu, who was under house arrest for the last few weeks, became free on Dec. 20. Zhu had been arrested in Singapore on Sept. 29 and sentenced to four months imprisonment, serving two-thirds of his sentence under house arrest.Throughout the bankruptcy proceedings, legal fees have accumulated to $49.7 million while the report suggests ongoing efforts to maximize creditor recovery.