Japan Tops Crypto Losses to North Korean Hackers

Korean Crypto Market’s Healthy Growth Requires Corporate ParticipationA healthy growth of the South Korean virtual asset industry needs the private sector’s investment in cryptocurrencies, a legal scholar argued at a recent international academic conference titled “Digital Financial Transition and International Trends in Commercial Law.”That’s according to a report by local news outlet Edaily. Namgung Ju-hyun, an assistant professor of commercial law at Sungkyunkwan University Law School, attended the two-day event hosted over the last weekend by the Korea Commercial Law Association to point out that the current restrictions on corporate investments in cryptocurrencies have not only increased speculation within the domestic market but have also hampered Korean companies’ endeavors in pursuing blockchain-powered projects.Banks and companiesProfessor Namgung addressed the current situation where Korean commercial banks are withholding real-name bank accounts from firms without specific legal grounds. This practice became common after the Act on Reporting and Using Specified Financial Transaction Information was revised in March 2021. This Act requires virtual asset service providers (VASPs) to adhere to anti-money laundering (AML) regulations; therefore, firms wishing to trade cryptocurrencies with the South Korean currency must have real-name accounts with domestic banks. While the Act doesn’t explicitly restrict issuing such accounts to corporations, banks have shown reluctance to do so.However, in countries like the United States, cryptocurrency trading in the corporate world is thriving. For instance, institutional investors at Coinbase, America’s largest crypto exchange, accounted for over 85% of the total trading volume in the first quarter, a rise from 76% during the same period last year.Photo by JESHOOTS.COM on UnsplashMinor altcoins’ strong presenceProfessor Namgung identified the prevalence of retail investors and their speculative behaviors as the primary issue plaguing the Korean crypto market. A case in point is a relatively large proportion of trades in minor altcoins. As per a report by the Korean Financial Services Commission (FSC), the combined market cap of BTC and ETH accounted for only 33% in the domestic market, a contrast to their 58.2% share in the global market. Namgung underscored that the high trade volumes of volatile crypto assets contribute to the Kimchi premium, a phenomenon where crypto prices in Korea are higher than those in other countries.Namgung also mentioned that Korean companies like Hyundai Motor, Lotte Homeshopping, and Shinsegae, despite promoting projects based on non-fungible tokens (NFTs), face difficulties due to their inability to convert cryptocurrencies to cash on domestic crypto exchanges. In comparison, global companies like Nike are successfully leveraging NFTs for their projects and exploring new business opportunities.Role of financial authoritiesProfessor Namgung urged Korean financial authorities to devise guidelines that encourage corporate participation in the crypto market, eliminating uncertainties. As a step towards risk management, he recommended considering publicly traded companies or established firms of a certain size as initial participants in the crypto market.Input from international scholarsPrior to Professor Namgung’s talk, the international academic conference also featured presentations from foreign scholars, namely Mirella Pellegrini, a professor at LUISS University of Rome; Marco Bodellini, an associate lecturer in banking and financial law at Queen Mary University of London; and Albert H. Choi, a professor of law at the University of Michigan Law School.Professor Pellegrini discussed personalized financial products and investor protection in the digital market from the perspective of the European Union. Dr. Bodellini provided insights into central bank digital currencies (CBDCs) from a policy perspective, while Professor Choi focused on digital transformation and retail shareholder engagement.

3AC Co-Founder Disputes US Jurisdiction Citing Singaporean CitizenshipKyle Davies, the Co-Founder of the failed Singaporean crypto hedge fund Three Arrows Capital (3AC), has asserted that he is solely a citizen of Singapore and not of the United States.Photo by Towfiqu barbhuiya on PexelsEvading pursuit of damagesThe assertion may have relevance as it may mean that Davies can evade actions taken against him in a US court on the basis of a lack of jurisdiction. In a recent filing with the US Bankruptcy Court for the Southern District of New York (SDNY), Davies presented documents demonstrating that he had renounced his US citizenship in December 2020. He emphasized that he obtained citizenship in Singapore after being issued a passport in early 2021 and that he does not subject himself to the jurisdiction of US courts.$3.5 billion owedIn June it emerged that liquidators appointed for 3AC were seeking to recover $1.3 billion from the fund’s co-founders, Davies and Su Zhu. The firm reportedly owes creditors a staggering $3.5 billion.In the midst of public criticism surrounding the events leading to 3AC’s collapse, Zhu and Davies launched a platform called Open Exchange (OPNX), allowing trading claims against bankrupt crypto firms. Despite a deficit of goodwill for the duo in the crypto sector, they have been putting all their energies into the new venture.Last month, they outlined that they would donate future earnings from OPNX to 3AC creditors. It’s difficult to reconcile that claim when with this action, Davies is trying to evade contributing to creditors via the 3AC bankruptcy process and this legal action taken by the liquidator.Renounced citizenshipAccording to court documents, Davies officially renounced his US citizenship at the US Embassy in Singapore, citing his decision to reside in the country on a long-term basis. He revealed that he got married to a Singaporean national in 2017 and subsequently gained permanent residency in Singapore. Because Singapore does not permit dual nationality, Davies chose to renounce his US citizenship to establish himself fully as a Singaporean citizen.The submission of these documents came after 3AC’s liquidators requested a subpoena to gather information on the crypto hedge fund’s collapse. Both Kyle Davies and Zhu, were subpoenaed on Twitter, as their whereabouts were unknown. However, while Zhu, being a Singaporean national, might not be subject to the subpoena while residing outside the United States, Davies’ refusal to comply with the order led to discussions about holding him in contempt of court.In response to the subpoena controversy, Davies’ legal representatives claimed that he cannot be validly served with process as a non-party in the case, as he has not been a US citizen or resident since well before the case was initiated. They stated that the court lacks personal jurisdiction over him due to his renunciation of US citizenship. Accordingly, they requested that the Service Order and Compel Order, which were based on the assumption that Davies was a US citizen, be vacated.

Indonesia’s Financial Regulator Appoints Hasan Fawzi to Oversee CryptoThe Financial Services Authority (OJK) of Indonesia has chosen Hasan Fawzi, a former executive of the Indonesia Stock Exchange (IDX), as the head of fintech and digital assets oversight and innovation.That’s according to a number of reports published in local and regional news outlets on Thursday. Fawzi, who has served as the Director of the Indonesia Bond Pricing Agency (IBPA) since 2008, brings a wealth of experience in the securities pricing sector. Alongside Fawzi, Lodewik Paulus Agusman, previously responsible for the internal audit department at Bank Indonesia, has also been elected as a member of the OJK Board of Commissioners. These appointments were approved by the House of Representatives Commission overseeing banking and finance.Photo by Tom Fisk on PexelsDigital asset oversightFawzi’s role as the Executive Director for the Supervision of Technological Innovation in the Financial Sector, Digital Financial Assets, and Crypto-assets places him in charge of overseeing peer-to-peer lending platforms, cryptocurrencies, and other components of the evolving industry.Indonesia’s stance on cryptocurrencies remains complex and multi-faceted. While the country is striving to launch a state-backed crypto exchange by mid-2023, as announced by Didid Noordiatmoko, head of the Commodity Futures Trading Regulatory Agency (Bappebti), recent statements by Bali Governor Wayan Koster suggest a tightening of regulations concerning crypto payments.Governor Koster emphasized that foreign tourists who use cryptocurrencies for payments, violate visa provisions, or engage in unauthorized activities will face strict consequences. The Bali Representative Office of Bank Indonesia reiterated that while cryptocurrencies themselves are legal in Indonesia, their use as a payment instrument is not.The appointment of Hasan Fawzi to OJK demonstrates Indonesia’s strategic efforts to strengthen oversight and foster innovation within the fintech and digital asset sectors. Fawzi’s extensive experience in securities pricing and leadership in the Indonesia Stock Exchange make him a valuable addition to the regulatory landscape. As Indonesia navigates the complexities of cryptocurrency usage, it will be fascinating to observe the evolution of regulations and how the country’s financial authorities shape the future of the industry.Controlled innovationThese recent developments highlight Indonesia’s determination to stay at the forefront of financial technology albeit with efforts to retain strict controls over the rollout of that innovation. The country recognizes the importance of effectively regulating emerging technologies while fostering an environment conducive to innovation. With Fawzi at the helm of fintech and digital assets oversight, the OJK aims to strike a balance that protects investors and consumers while promoting technological advancement.As these appointments await final approval from President Joko Widodo, the financial industry and crypto enthusiasts will closely watch Indonesia’s regulatory landscape. The decisions made in the coming months will shape the future of fintech and crypto in the country. Indonesia’s approach to this dynamic sector serves as a case study for other nations seeking to establish oversight and embrace the potential of digital assets. Their international regulatory peers will be monitoring efforts in Indonesia to bring about effective regulation of the digital assets space.