Thailand to move forward with $14 billion digital wallet program

Hong Kong Broadens Pilot Program for China’s Digital YuanA senior Hong Kong official announced last week that the Chinese autonomous territory plans to expand its pilot program of the e-CNY, China’s digital yuan, to include additional banks and payment platforms.Photo by Chi Lok TSANG on UnsplashDriving cross-border payment efficiencyThe e-CNY project is China’s ambitious endeavor to bring a digital counterpart to its national currency, the yuan, into mass market, everyday use. The primary objectives of this latest initiative are to enhance the efficiency and convenience of cross-border payments and to bolster greater use of the digital yuan on an international basis.Given Hong Kong’s status as a special administrative region of China and bearing in mind that it is a global financial hub, its role in the e-CNY project is likely to be of paramount importance to the Chinese administration.Hong Kong has been actively involved in the e-CNY project for some time. Previously, the local regulator, the Hong Kong Monetary Authority (HKMA), and the People’s Bank of China (PBOC) jointly explored and tested e-CNY’s feasibility and interoperability in cross-border scenarios.Ongoing collaborationOver the years, these two authorities have conducted numerous technical trials to assess the practicality of implementing the e-CNY. The PBOC initiated e-CNY testing in mainland cities in 2019, followed by cross-border trials involving Hong Kong and Macau. Collaboration between Hong Kong and the mainland relative to the digital yuan was initiated in December 2020 when a pilot program was launched.That program enabled Hong Kong residents to utilize e-CNY wallets for purchases at specified merchants in Shenzhen, aligning at the same time with a separate initiative, the objective of which is to achieve closer economic and social integration between Hong Kong, Macau, and nine cities in Guangdong province.Hong Kong and Mainland China had also partnered on technical testing in 2021 aimed at evaluating the technical feasibility, operational efficiency, regulatory implications, and legal considerations of employing the e-CNY for cross-border trade settlement between the two areas. That testing program is likely to be providing valuable insights, which Chinese authorities can use to expand the e-CNY’s scope and use cases relative to cross-border transactions.Completion of initial testing phaseHong Kong recently successfully concluded the first phase of its e-CNY trial, featuring local banks and the Hong Kong Monetary Authority (HKMA). This phase primarily focused on assessing the technical feasibility of employing the e-CNY for cross-border payments between Hong Kong residents and mainland merchants.What Christopher Hui, Secretary for Hong Kong’s Financial Services and the Treasury, was referring to last week at a fintech event, is effectively the second phase of that overall trial program. This upcoming phase will involve a broader array of banks, payment service providers, and use cases, expanding the scope of e-CNY testing.Taking this latest development into account from the point of view of e-CNY development by the Chinese government, it’s patently obvious from the myriad of initiatives that keep coming week after week that the Chinese authorities are determined to drive the e-CNY towards ever greater real-world use.

Terraform Labs Co-Founder Daniel Shin Denies Wrongdoing in LUNA CollapseShin Hyun-seong, popularly known as Daniel Shin, has refuted accusations against him related to the $40 billion collapse of the stablecoin TerraUSD and its companion token, LUNA, according to a report by local news outlet Newspim. He presented this defense during his initial trial at the Seoul Southern District Court on October 30 (local time).Shin co-founded Terraform Labs, the company responsible for issuing TerraUSD and LUNA. His co-founder, Do Kwon, is currently serving a four-month prison sentence in Montenegro for passport forgery.Photo by Tingey Injury Law Firm on UnsplashProsecution’s allegationsKorean prosecutors allege that since 2018, Shin and his colleagues have concealed the fabricated nature of the “Terra project.” By manipulating trades and releasing misleading information, they purportedly misled investors into thinking the project was successful. It’s believed they sold off their tokens before the LUNA crash in May 2022, earning KRW 462.9 billion ($343.3 million) from these activities. They are suspected of personally taking KRW 376.9 billion from this amount.Prosecutors are focusing on Shin as the potential orchestrator of the LUNA crash. They speculate he began selling LUNA tokens around when Terraform Labs launched the Anchor Protocol in March 2021. This DeFi protocol increased the popularity and value of LUNA tokens. Before the crash, Shin is alleged to have gained at least KRW 154.1 billion.Defense argumentHowever, Shin’s legal team countered by asserting that Shin had cut ties with Kwon in 2020. They argued the decline of TerraUSD and LUNA was due to Kwon’s mishandling of the Anchor Protocol and an external attack, neither associated with Shin. Regarding the exploit, Terraform Labs has pursued legal action in the United States Southern District of Florida, claiming that American market maker Citadel Securities played a part in undermining TerraUSD in May 2022.Defending Shin, his lawyers emphasized that at the inception of the Terra project, there were no legal guidelines specifically for cryptocurrency transactions. Additionally, unlike Do Kwon who kept fleeing abroad, Shin willingly came back to Korea and has been cooperating with the investigation. They also noted he received only 32% of the 70 million LUNA tokens initially promised. Regarding classification, they stated LUNA isn’t legally recognized as a security.Shin’s lawyers further argued the prosecution hasn’t clearly identified victims or adequately outlined the components of fraud in this case. They said the prosecution’s case hinges on viewing LUNA as a security. However, Shin’s legal representatives maintained that under the Korean Capital Markets Act, LUNA isn’t a security, making its trades non-fraudulent.To counter a US court ruling the prosecution presented — that a token is a security — Shin’s defense highlighted that the verdict is from a lower court and remains contested. Earlier, prosecutors had cited a ruling from the United States Southern District Court of New York, which classified the XRP tokens sold to institutional investors as securities.

Terraform Labs seeks summary judgment to dismiss SEC allegationsLawyers representing bankrupt Singaporean crypto firm Terraform Labs and its co-founder, Do Kwon, have requested a summary judgment from a New York judge in their legal battle against the United States’ Securities and Exchange Commission (SEC).If granted, such a dismissal could potentially spare them from a full-blown trial. In their motion, the legal team argued vehemently that they are innocent of the SEC’s allegations, maintaining that the regulator has failed to provide any compelling evidence of wrongdoing.Photo by Bermix Studio on UnsplashDefining a securityThe motion, which was filed last Friday in the U.S. District Court for the Southern District of New York, asserts that the implicated cryptocurrencies of Terra Classic (LUNC), TerraClassicUSD (USTC) and Mirror Protocol (MIR), together with its Mirrored assets (mAssets), are not securities as claimed by the SEC in its complaint.The heart of the matter revolves around the SEC’s assertion that Terraform Labs offered or sold securities, a claim vehemently denied by the defendants. The SEC initially brought the case in February, referencing algorithmic stablecoin TerraUSD, which famously collapsed in May 2022.Lawyers claim case is unsubstantiatedBoth Kwon and Terraform Labs’ attorneys argued that despite over two years of investigation, more than 20 depositions, and the exchange of a staggering two million pages of documents, the SEC’s case remains unsubstantiated.The SEC’s original complaint in February accused Kwon and Terraform of raising substantial sums from investors by offering and selling an inter-connected suite of crypto asset securities, many of which were unregistered transactions. SEC Chair Gary Gensler added that Terraform and Kwon had failed to provide investors with full disclosures, notably concerning LUNA and TerraUSD.A key element of the dispute centers on the SEC’s allegation that Kwon and Terraform moved millions of dollars into Swiss bank accounts for personal gain. According to the agency’s complaint, the company and Kwon transferred 10,000 bitcoins to a financial institution based in Switzerland. The legal team representing Kwon and Terraform vehemently denies this allegation, characterizing it as baseless and unfounded.Flawed stablecoin designAlgorithmic stablecoins, such as TerraUSD, operate using market incentives via algorithms to maintain a stable price. Terra was tied to Luna, a governance token, in an attempt to stabilize prices. Unfortunately, the collapse of TerraUSD in 2022 destroyed in excess of $40 billion in value held by investors. It also had a domino effect, leading to a series of other crypto platform collapses later in 2022.Judge Jed Rakoff, presiding over the case in the Southern District of New York, had previously denied an attempt by Terraform Labs and Kwon to have the case dismissed. This new motion for summary judgment represents their latest effort to put an end to the legal proceedings.In a separate but related action, lawyers representing Terraform Labs Co-Founder Daniel Shin asserted that Shin played no role in the collapse of TerraUSD. In a Seoul district court, they emphasized that Shin had nothing to do with the collapse despite being indicted in South Korea in April on various charges, including fraud.