KakaoBank to Conduct Routine Due Diligence on Crypto Exchange Coinone

China's highest judicial authorities, the Supreme People's Court and the Supreme People's Procuratorate, have released a judicial interpretation that includes the use of virtual assets to transfer illicit funds as a recognized method of money laundering. This move aims to strengthen the legal basis for investigating and prosecuting cases linked to cryptocurrency and money laundering activities.Photo by Vidar Nordli-Mathisen on UnsplashClarifying the legal status of crypto transactionsThe new judicial interpretation classifies virtual asset trading as a potential channel for money laundering. It specifies that using virtual-asset transactions or financial-asset exchanges to transfer or convert the proceeds of crime falls under the act of “disguising or concealing the source and nature of criminal proceeds and their gains by other means” as outlined in the country’s criminal law. Liu Honglin, founder of the Shanghai-based Man Kun law firm, clarified in a social media post that the interpretation does not equate all cryptocurrency trading with money laundering. According to Liu, the directive is not intended to criminalize the possession or trading of cryptocurrencies domestically but to provide clear legal guidelines for prosecuting specific illegal activities linked to crypto transactions. Impact on crypto trading and enforcementShao Shiwei, a fintech lawyer based in Shanghai, suggested that this interpretation could pose challenges for stablecoin merchants and increase legal risks for those involved in receiving illicit funds through crypto trading. The interpretation is part of broader efforts to regulate the virtual asset space, following the comprehensive ban on crypto trading activities by the People’s Bank of China and other authorities in September 2021. Despite the ban, many investors have continued to find ways to engage in crypto trading, sometimes circumventing capital control measures. For example, in May, Chinese police dismantled an underground bank that utilized the USDT stablecoin for foreign currency exchanges involving over 13.8 billion yuan ($1.9 billion). This incident underscores the ongoing challenges in enforcing existing regulations against the backdrop of innovative methods to bypass legal restrictions. 

XPLA Welcomes Mobile Game Idle Ninja Online on Its MainnetSouth Korean game developer Com2uS has revealed that its blockchain gaming platform, XPLA, will be launching Idle Ninja Online, an AFK MMORPG, on its mainnet. AFK MMORPG is an acronym for away from keyboard massively multiplayer online role-playing game.Photo by Rodion Kutsaiev on UnsplashGameplay and featuresIdle Ninja Online offers players the opportunity to level up their characters by battling monsters that pose a threat to the ninja village. The game’s idle gameplay element ensures accessibility for all players. Its charming graphics, unique dungeons, and various bosses captivate players’ attention. A noteworthy feature is the ability for players to strategically combine tens of thousands of in-game items to create custom decks for engaging in battles. With availability in multiple languages, including English, Japanese, Thai, and Spanish, the game has garnered continued interest from gamers across the globe.P2O system next monthNext month, Idle Ninja Online is set to introduce a play-to-own (P2O) system that will utilize its native token, NINKY, which is compatible with the Ethereum virtual machine. Players will be able to earn NINKY tokens through gameplay, which can then be traded for XPLA, the native token of the XPLA ecosystem.Paul Kim, CEO of XPLA, extended a warm welcome to Puzzle Monsters’ acclaimed Idle Ninja Online as it joins the XPLA ecosystem. He said that the close collaboration between the two entities will showcase creative and entertaining content to Web3 gamers on a global scale.XPLA is a global blockchain mainnet encompassing an NFT marketplace, a metaverse, and various entertainment services. In July, it introduced well-regarded titles like action RPG Summoners War: Chronicles, casual game MiniGame Party, and fishing game Ace Fishing: Wild Catch. The XPLA mainnet has established partnerships with renowned Web3 projects, including Japanese gaming blockchain Oasys, Hong Kong-based blockchain gaming developer Animoca Brands, decentralized gaming guild Yield Guild Games (YGG), and blockchain infrastructure platform Blockdaemon.

Korea considers legal recognition of virtual assets as trust assets for investor protectionSouth Korea’s Ministry of Justice (MOJ) is assessing whether customers’ virtual assets on cryptocurrency exchanges should be legally recognized as trust assets. This classification would give users priority in claiming their virtual assets in case of an exchange’s bankruptcy, thus strengthening investor protection. There’s a noted concern about potential disputes in such bankruptcy situations, as users’ digital assets are typically considered to be in the custody or storage of these platforms.Photo by Daniel Bernard on UnsplashLegal study by Seoul National UniversityAccording to a Tuesday report by local news outlet ChosunBiz, citing industry and legal sources, the MOJ has initiated a legal study on this subject. The research is being conducted by the Seoul National University R&DB Foundation, which started the project earlier this month.Through this study, the MOJ is expected to examine the legal classification of cryptocurrency as property. This review is significant because, for cryptocurrencies to be held in a trust, they must be legally recognized as property. Meanwhile, the upcoming Virtual Asset User Protection Act, set to come into effect next July, mandates that only cash deposits made by users be segregated from the assets of the exchange itself.In Korea, under the current provisions of the Capital Markets Act, virtual assets are not recognized as being held in a trust. Instead, staked cryptocurrencies are seen as being under custodial management or storage. In such arrangements, only a debtor-creditor relationship concerning virtual assets is acknowledged, differing from the legal framework of a trust.Prioritization of rightsIf a cryptocurrency exchange becomes insolvent and enters liquidation, the current legal framework could end up prioritizing the rights of the exchange’s creditors or shareholders over those of the crypto investors. This situation has faced criticism for its inadequate protection of investors. However, if the crypto assets were considered to be held in trusts, it would enable users to acquire “rights to foreclose outside bankruptcy.” This means users would have the right to receive priority reimbursement for their crypto assets, offering them a higher level of protection in the event of an exchange’s bankruptcy.Regarding this development, an official from the MOJ said that while the study is a fundamental legal review focused on exploring ways to protect users through the application of trusts for various cryptocurrency transactions, including those involving decentralized finance (DeFi), it is too early to provide specific details at this stage.