Solana faces rising phishing threats in South Korea amid growing adoption

Hong Kong Deems Crypto as PropertyIn dealing with a case involving defunct Hong Kong-based cryptocurrency exchange Gatecoin, a Hong Kong judge has determined cryptocurrency as being property “capable of being held in trust.” Presiding over the case, Justice Linda Chan stated recently that Hong Kong takes a broad definition of what constitutes property.©Pexels/mitbg000Digital assets held in trustHaving expended efforts to try and recover funds from a former payments service provider that the company had partnered with, Gatecoin announced that it would shut down the business and commence the liquidation of the business in 2019. With bankruptcy proceedings being notoriously slow, that process continues today, resulting in Justice Chan’s recent determination.The notion of property held in trust is a common theme that has been explored in a number of cryptocurrency business bankruptcy processes recently, including the BlockFi, Celsius and FTX processes.Gatecoin has not proven to be any different in this regard. Liquidators had turned to the Hong Kong courts for direction as to how creditors’ digital assets, as held on the platform, should be defined. If property is deemed to have been held “in trust”, then that determination has implications for the owner of those assets relative to the bankruptcy proceedings.In the case of BlockFi, a determination was made in a US court that those who had simply custodied digital assets with the platform without earning any yield were property owners and that they should have their assets returned.The importance of Terms of Service (ToS)Alex Mashinsky, the founder and CEO of failed crypto lending competitor Celsius outlined to service users on a number of occasions that the assets remained their property even though his company used customer assets for various trading activities. The bankruptcy judge reached a different determination based on the terms of service. Service users had acknowledged in signing off on Celsius’ terms of service that assets held on the platform that accessed yield-bearing products became the property of Celsius when deposited within those products on the Celsius platform.Although it has not been dealt with yet, 1.4 million creditors relative to the bankruptcy process of failed cryptocurrency exchange FTX are likely to discover later this year if they can claim “in trust” property rights. An ad hoc group of creditors has taken legal action for the return of their digital assets on the basis of an assertion that the assets remained their property when transferred onto the platform.ImplicationsWhilst a seemingly uninteresting determination to anyone less informed about such bankruptcy proceedings, such decisions can have profound consequences. In a bankruptcy process, there is a hierarchy of creditors, with some having greater rights than others when it comes to the distribution of bankruptcy estate funds. Recognition of assets being held in trust as property would likely take those property owners out of the bankruptcy process, allowing the return of their funds (where available) while others who are classified as creditors get a distribution of whatever funds are left in the bankruptcy estate thereafter.Additional complexityGatecoin’s case was further complicated by the existence of various sets of terms of service. In two of the three instances, the court found that no trust language existed. There is one subset of creditors who may have the ability to claim their digital assets as property. The liquidators have agreed to identify them and contact them in that regard.While the process may be proving to be a minefield for Gatecoin’s creditors, it has served a broader purpose in crypto more generally as it has provided yet another opportunity for another jurisdiction, in this instance Hong Kong, to provide some more clarity with regard to the legal status and standing of cryptocurrency.

Japanese Firm Exec Underscores User Experience and Collaboration in Web3Hiroshi Tsuruoka, the Chief Operating Officer (COO) of UNCHAIN, a Japanese company specializing in Web3 entertainment services, recently underscored the significance of unique experiences and collaboration in the Web3 space. He shared these insights during his conversation with Webmaster Forum, a platform offered by Japanese web content provider Impress Corporation.UNCHAIN, Tsuruoka’s employer, aims to assist companies in entering the Web3 sphere and developing entertainment services that offer users a secure and enjoyable experience. The company provides comprehensive support, including planning, development, and marketing, tailored specifically for the Web3 environment.Photo by Shubham’s Web3 on UnsplashImportance of content qualityDuring the interview, Tsuruoka said that Web3 seems to have lost some of its previous popularity in Japan. Initially, the market experienced rapid growth driven by highly speculative products like NFT artworks and Play to Earn (P2E) games, which attracted participation from many Japanese companies. However, the subsequent downturn of global projects prompted the Japanese blockchain industry to reassess its strategy, recognizing the paramount importance of content quality.Meaningful experiencesAccording to Tsuruoka, the appeal of blockchain games extends beyond their profit potential, deriving more from the unique, enjoyable experiences they offer. He believes that gamers find it meaningful when they play a pivotal role in expanding the gaming market and giving rise to new gaming cultures. Moreover, the incorporation of NFTs in games allows users to retain ownership of their in-game items even if a company discontinues its service, fostering a deeper emotional connection between users and their virtual possessions.This emerging trend fosters a culture of creation, where users, operators, and creators come together in a collaborative space to generate secondary creations and new services. Users delight in actively contributing to this ecosystem and helping it grow.Tsuruoka recognizes that decentralization presents both advantages and challenges. On one hand, it offers individuals greater freedom. However, it also places the full responsibility of data management on the users themselves, in contrast to a centralized environment where the game provider handles data management.Tsuruoka advises against placing excessive emphasis on speculation and financial gain when discussing Web3. Instead, he encourages companies to prioritize delivering meaningful and valuable experiences to users. Tsuruoka believes that emotional experiences, such as owning a distinctive avatar through digital assets, hold tremendous potential in the Web3 realm.Web2 success firstHe asserts that no Web3 project can guarantee success without proving its worth in the Web2 space. Services that proved valuable in Web2 could experience significant growth when combined with Web3 elements.Strong relationshipsTsuruoka highlights the importance of establishing strong relationships between companies and users in the Web3 environment. While platforms like Discord can facilitate these relationships, it is crucial to strategically design user engagement, motivation, and enjoyment before launching a service. Effective community management in the Web3 space requires deep user engagement, which entails ongoing and intensive communication between operators and users.Tsuruoka emphasized the need to heed user feedback. Regardless of the service type, incorporating user opinions and collaborating with them can result in significant community and project growth, with corresponding increases in asset values. He added that this is not limited to the Web3 domain.

Hodlnaut to proceed to liquidationCryptocurrency lender Hodlnaut, based in Singapore, is set to undergo liquidation, according to former interim judicial managers, Aaron Lee and Angela Ee.The High Court of Singapore has lifted the protection order it had put in place in respect of the business and efforts to restructure it in August 2022. The decision, formalized with a winding-up order filed on Friday in the High Court, follows a period of trading in 2022 when the company incurred losses of approximately $189 million due to the collapse of the Terra ecosystem in May 2022.The liquidators, tasked with providing regular updates to the more than 17,000 creditors, will oversee the process. Hodlnaut’s crypto assets, amounting to $13.3 million, were locked on FTX before the exchange froze withdrawals and declared bankruptcy last November. Despite a rejected restructuring plan earlier this year, the creditors opted for liquidation, deeming it more favorable to their interests. Aaron Lee and Angela Ee will now act as the appointed liquidators, overseeing the winding-up process under the Insolvency, Restructuring and Dissolution Act of 2018.Photo by Hu Chen on UnsplashCreditors favored liquidationAt an early stage, Hodlnaut founders Simon Lee and Zhu Juntao were in favor of a business sale as a preferable alternative to liquidation. Back in February, there appeared to be some potential of a sale, with several buyers having indicated an interest in the business. The identity of these interested parties was never revealed and the interim judicial managers of the restructuring process later confirmed that no “white knight” had emerged to buy out the business.It became clear in April of this year that creditors preferred liquidation as opposed to attempting to restructure the business. The Algorand Foundation is a leading creditor, with a $35 million exposure to Hodlnaut. In a court filing in April, the Algorand Foundation, alongside other leading creditors Samtrade Custodian Limited and S.A.M. Fintech Pte Ltd., were noted as being opposed to a restructuring.OPNX bidIn August it emerged that controversial crypto claims trading platform OPNX, owned by Three Arrows Capital’s (3AC) Kyle Davies and Su Zhu alongside Mark and Leslie Lamb from CoinFLEX, was mounting a bid for Hodlnaut.OPNX had proposed to provide a capital injection of $30 million. The proposal outlined that this investment would be made in the form of FLEX tokens, the native token of the CoinFLEX platform.Following consideration by the interim judicial managers overseeing Hodlnaut’s restructuring process, it decided not to take up the offer. It was decided that the FLEX tokens had a speculative value and that they were highly illiquid.Additionally, no clear timeline had been provided by OPNX in respect of the repayment of creditors’ debts. Furthermore, the proposal was found to be scant on detail, particularly with regard to payments which were limited to 30% of liabilities. In August the FLEX token experienced a large drop, falling 90% in value.