Former SoftBank Executive Launches Stablecoin in Abu Dhabi

Haru Invest Considers Server Suspension as Troubles PersistIn the wake of halting withdrawals in June, Haru Invest, a Singapore-headquartered cryptocurrency platform, is contemplating the suspension of its server. This decision is part of the firm’s ongoing efforts to streamline operations and reduce maintenance costs.Photo by David Guenther on UnsplashCost reductionCEO Hugo Lee made the announcement on Monday, underscoring the significant burden of server maintenance costs on the company’s finances. He acknowledged that this cost represents a substantial portion of their fixed expenses and is thus a top priority for the firm.Lee disclosed:“We plan to suspend the service in a few weeks, backing up all member information.”However, he also noted that the company is yet to finalize a concrete plan for the server suspension.The move to shut down the server aligns with Haru Invest’s broader strategy to lower all costs associated with its services. Lee explained:“Some of the current fixed expenditures include the upkeep of Haru Invest services, the cost of workspace like the office, and the cost of communication with our members.”The company is actively seeking ways to reduce these expenses and preserve its assets.Asset distributionAdditionally, Lee assured users that the assets conserved thus far would be included in the distribution to those who have had their funds locked on the platform since June, offering a glimmer of hope to impacted users.Nevertheless, the announcement of the server suspension has raised concerns within the Haru Invest community. Some users have expressed skepticism about the purported high costs of server maintenance, believing the firm’s claim to be exaggerated.One user, voicing this discontent, commented on Haru Invest’s Telegram channel, “Server costs cost nothing.” Another remarked: “Servers are gone soon guys, huge costs, 200 USD a month.” According to industry standards, the maintenance costs for running a server for a small to medium-sized business typically range between $35 to $500 per month.Unhappy platform usersLee’s statement regarding the impending server suspension follows the platform’s earlier decision to terminate deposits and withdrawals in June. This decision was coupled with the closure of Haru Invest’s offices and the dismissal of numerous employees, as reported by local news agencies.Haru Invest attributed these issues to the fraudulent activities of the consignment operator B&S Holdings, formerly known as Aventus. While some investors accused the firm of orchestrating a “rug pull,” Haru Invest denied these allegations and maintained its innocence. One user posted the following claim on X (formerly Twitter) last week: “Rugpull. If justice is served, the scammers will be behind bars.”In a bid to address concerns over its corporate rehabilitation application, Lee appeared in court in September, emphasizing that Haru Invest was actively cooperating with investigating agencies. However, the company has yet to provide a timeline for the recovery of users’ assets as of early October.Lee also addressed the matter in Monday’s statement: “We are also responding to the rehabilitation proceedings that some of our members have filed with the court as mentioned in our previous announcement, in addition to actively cooperating with other authorities’ investigations. ”Haru Invest is reportedly facing a class-action lawsuit with disgruntled investors alleging fraud.

Strengthened KYC Spurs More Suspicious Transaction Reports from Korean Crypto ExchangesIn South Korea this year, there has been a significant surge in the number of suspicious transaction reports (STRs) related to cryptocurrencies, according to local news agency Yonhap.This increase is primarily attributed to cryptocurrency exchanges fortifying their Know Your Customer (KYC) procedures. This proactive response follows the controversy surrounding lawmaker Kim Nam-kuk’s significant virtual asset holdings, which were unveiled in May. His scandal came to light when a substantial amount of WEMIX tokens, valued in billions of Korean won, were transferred from the Bithumb exchange to the Upbit exchange. Upbit, deeming it a suspicious transaction, promptly reported the matter to the Financial Intelligence Unit (FIU) of the Financial Services Commission (FSC).Photo by ron dyar on UnsplashGrowing number of suspicious transaction reportsAs the scandal continued to gain traction, the political realm reached a consensus to conduct investigations into the cryptocurrency holdings of all lawmakers. Additionally, the National Human Rights Commission of Korea initiated the tracking of all lawmakers’ cryptocurrency holdings last month, a process set to span 90 days.Data received by lawmaker Yoon Young-deok on October 30 from the FIU reveals that the number of STRs originating from virtual asset service providers (VASPs) has reached 11,646 in the first nine months of this year. This figure has already exceeded last year’s total of 10,797 STRs.Under the current Act on Reporting and Using Specified Financial Transaction Information, commonly referred to as the Financial Transaction Reporting Act, VASPs are mandated to report to the FIU if they have reasonable grounds to suspect that a customer’s financial transactions are connected to illicit property, money laundering, or terrorist financing. The Act has been in full effect since October 2021.In 2021, a total of 199 reports were submitted under this Act. The number of reports surged to over 10,000 the following year, and in the current year, it continues to grow at an even faster rate. The FIU reviews and analyzes these STRs in accordance with Article 10 of the Financial Transaction Reporting Act. It forwards the relevant information to law enforcement agencies only when it is deemed necessary for the investigation of a specific criminal case.Enhanced but varied approaches by exchangesCrypto exchanges have bolstered their customer verification requirements, especially for customers deemed to have a high risk of involvement in money laundering, in accordance with the Financial Transaction Reporting Act. This entails the need for additional scrutiny of the source of funds and the purpose behind transactions. Notably, if customer verification appears suspicious, exchanges are mandated to confirm the authenticity of the information using reliable documents.However, it’s important to note that the enforcement decree accompanying this Act grants exchanges the flexibility to verify documents based on their own business guidelines. This autonomy has been provided to assist exchanges in effectively mitigating money laundering risks by taking into account their individual business rights and characteristics.For instance, Upbit, South Korea’s largest cryptocurrency exchange, has implemented a fraud detection system (FDS) powered by artificial intelligence to continuously monitor and identify fraudulent transactions. This initiative has earned Upbit recognition from the FIU as an outstanding organization for reporting suspicious transactions during the first half of this year.On the contrary, Bithumb has devised and applies internal guidelines dedicated to anti-money laundering (AML) measures. The exchange has instituted a streamlined customer verification process for customers who are assessed as having a low likelihood of being engaged in money laundering activities. However, this simplified process is not extended to individuals from countries that have not adopted the recommendations of the Financial Action Task Force (FATF).Korbit monitors information related to customer verification through a dedicated department. It declines transactions for customers who have not undergone sufficient verification and validation procedures.Coinone’s AML department examines customer transactions comprehensively. It maintains ongoing reviews of customer information, business operations, risk assessments, and the source of funds. If any of these aspects are found to be suspicious or inadequate, the AML department proceeds with additional customer verification, including the disclosure of the source of funds.Some raise concerns about the inconsistency in customer verification standards for AML and STRs across different exchanges. When one exchange flags a transaction as suspicious, another might see it as routine. Such discrepancies highlight the need for uniform guidelines. Addressing this, the Digital Asset eXchange Association (DAXA), consisting of Korea’s five leading currency exchanges — Upbit, Bithumb, Coinone, Korbit, and Gopax — has set up an AML division to devise standardized rules for STRs.

SK C&C to Spearhead Establishment of Korea’s First Alternative Trading SystemSK C&C, the information communications technology arm of South Korean conglomerate SK Group, is set to launch the country’s first Alternative Trading System (ATS) — a securities trading venue that is more loosely regulated than an exchange — in the second half of next year.The firm announced on Wednesday that it will commence the multilateral trading system construction project for Nextrade, a corporation dedicated to preparing the ATS.Photo by Kanchanara on UnsplashCollaborative effort of securities institutionsNextrade was initiated by seven securities firms, including the Korea Financial Investment Association, and was jointly established by 34 participating institutions, including 19 securities companies, three securities-related institutions, and four tech companies in November of last year.SK C&C in particular has been working with Nextrade since 2019. When the corporation was still a consultative body of securities firms, the SK subsidiary was in charge of consulting on various matters regarding the establishment of the ATS and functional system requirements.Establishing a solid foundationThe aforementioned construction project aims to establish a multilateral trading system and an operation and management system to support the trading, brokerage, and agency functions of listed securities and depositary receipts on the ATS, which Nextrade will proceed with upon its official approval in the second half of next year. SK C&C will take on a major role in leading this task.“Based on our digital IT service capabilities that we have accumulated within the financial sphere, we will establish an efficient and reliable multilateral trading system that is on par with regular exchanges,” said Kim Nam-sik, head of the SK C&C Financial Digital2 Group.Besides facilitating multilateral trading, SK C&C will develop an information distribution system that processes investment information in connection with the Korea Exchange and the Korea Securities Depository, as well as a trading support system responsible for product information management, trading statistics, and administration.Trading after hoursThe ATS will allow trading past normal trading hours, which are usually from 9 AM to 3:30 PM — an especially attractive selling point for buyers and sellers. This will be made possible by compiling product information based on closing prices after the market closes, which will create an environment that allows for trading after hours.This service will not only be convenient for office workers but also help them refer to official announcements and the status of overseas markets to make more informed decisions, SK C&C said.Securities that can be traded after hours will be limited to listed stocks and depository receipts on the Korea Exchange for the time being, but SK C&C is reportedly looking into allowing trading of security tokens, non-security virtual assets, and NFTs.Ensuring uninterrupted operationsNotably, there will also be a Disaster Recovery Center, which will serve to protect the ATS’ major systems and data assets and ensure business continuity. A data backup system will be set up to reduce backup time and swiftly recover from any failures in case of potential security threats.Furthermore, the ATS plans to introduce new types of orders to enhance investor benefits in the domestic capital market, setting it apart from the Korea Exchange.