Crypto enthusiasm prevails in China despite crypto trading prohibition

Fraud Defense Sees Terraform Labs Pursue Access to FTX WalletsTerraform Labs, the Singapore-based cryptocurrency firm at the center of a lawsuit filed by the United States Securities and Exchange Commission (SEC) in February, is taking steps to bolster its defense against fraud charges.Photo by Anete Lusina on PexelsSubpoena for debtors’ recordsAccording to a motion filed with the FTX bankruptcy court in Delaware on Wednesday, the company is seeking permission from a judge to subpoena data from the bankrupt crypto exchange. The filing shows that Terraform’s legal team is requesting access to information about digital wallets utilized by short sellers between March and May 2022.The company believes that its algorithmic stablecoin’s collapse was not a result of natural market forces but rather a coordinated attack by short sellers, potentially involving Alameda Research, FTX’s sister company.The motion states: “To establish these defenses, TFL needs Debtors’ records about wallets, accounts, and assets used to transact on the FTX International and US exchanges and sales/offers of large volumes of cryptocurrencies developed by TFL, if any, by FTX Trading and West Realm Shires Services Inc. d/b/a FTX US.”Alleged securities fraudThe SEC’s lawsuit, filed on February 16, accuses Terraform Labs and its founder, Do Kwon, of orchestrating a multi-billion dollar crypto asset securities fraud. The regulator alleges that Terraform offered unregistered securities through its algorithmic stablecoin, TerraUSD (UST), and the Terra Luna (LUNA) token. The failure of Terraform in 2022 led to a staggering loss of over $40 billion in the crypto markets.The motion also targets Jump Trading, another entity accused by the SEC of colluding with Terraform to manipulate the price of the UST stablecoin. Jump Trading is facing a separate lawsuit in Illinois in the US, accused of purchasing millions of UST tokens in 2021 as part of an agreement with Terraform to maintain the stablecoin’s peg to $1.“Defendants misrepresented UST’s recovery by claiming that the algorithm was able to restore and maintain the price peg. According to the SEC, UST instead recovered its price peg because Defendants entered an arrangement with a U.S. trading firm, Jump Trading, […] to purchase substantial amounts of UST to support the price,” reads the court filing.Jurisdictional argumentsAside from its pursuit of FTX’s data, Terraform is also seeking to dismiss a class-action lawsuit in California, having already sought to have the SEC lawsuit dismissed. The company argues that since it is based in Singapore, US securities laws referenced in the lawsuit are not applicable to its foreign-developed protocols.Using a similar jurisdictional argument, Do Kwon also tried to conceal documents held in Singapore by the Singaporean company from the SEC, but he failed in that endeavor.Another significant development at Terraform has seen a new CEO appointed to lead the troubled company. According to a report in the Wall Street Journal on Wednesday, Chris Amani, who has been acting as Terraform’s Chief Operating Officer and Chief Financial Officer up until now, has been appointed as CEO.

Boyaa Interactive Greenlights $5 Million Investment in Bitcoin and EtherBoyaa Interactive International Limited, a Hong Kong-based investment holding company with a track record in developing online chess, card, and puzzle games, has made a strategic move with a proposed investment in digital assets.The company’s board of directors has recently given the green light for the allocation of a substantial budget amounting to $5 million for the purpose of acquiring cryptocurrencies.Photo by Traxer on UnsplashWeb3 positioningThe Chinese company, incorporated in the Cayman Islands, announced the move as Boyaa Interactive seeks to position itself for a dynamic shift into the realm of Web3.While the exact allocation breakdown was not detailed in the disclosure, the company outlined that its primary focus would be on procuring established cryptocurrencies, specifically Bitcoin (BTC) and Ether (ETH). Boyaa Interactive intends to execute these purchases through regulated and licensed trading platforms within the upcoming year.In a letter addressed to its shareholders and potential investors, the company emphasized the strategic nature of this decision:“The purchases of cryptocurrencies are for the consideration of the Group’s future business layout into the field of Web3. The Board is of the view that the purchases of cryptocurrencies (including mainly Bitcoin (BTC) and Ether (ETH)) by the Group are in the interests of the Company and its shareholders as a whole.”A challenging recent historyThe move towards cryptocurrencies is a significant pivot for Boyaa Interactive, a company that has navigated a series of challenges in recent years. In 2018, the company’s Chairman and CEO, Zhang Wei, faced legal troubles and was sentenced to 12 months in prison for bribery, which led to his resignation from all executive and management positions.Subsequent restructuring saw Dai Zhikang stepping in as the new Chairman of the board, while Tao Ying assumed the role of an Executive Director and Chairman of the Nomination Committee.Financially, Boyaa Interactive experienced a tough period marked by revenue contraction. The company reported revenue declines over the course of 2018, largely attributed to a governmental crackdown on online poker applications and the discontinuation of poker as a recognized competitive sport. Regulatory risks stemming from the Chinese government’s stance on Texas Hold’em poker games resulted in a substantial falloff in revenue by comparison with past performance.Funds seizureThese challenges cascaded into the following year, when the company encountered a substantial freeze on its funds. In 2019, a Chinese court ordered the freezing of RMB 635 million (approximately $88.6 million) belonging to Boyaa Interactive, following the legal actions against Zhang Wei and his associated entities.One of the company’s subsidiaries, Boyaa Shenzhen, was found guilty of offering bribes. The company responded by clarifying that the frozen funds could potentially be confiscated if linked to Zhang’s misconduct. However, Boyaa Interactive also stressed that it had not been directly implicated in the case, thus mitigating the legal risks to the broader organization.Amidst these adversities, Boyaa Interactive’s decision to invest in cryptocurrencies demonstrates its openness to adapting to changing technological landscapes and exploring new opportunities in Web3.

Singapore-headquartered cryptocurrency exchange platform Crypto.com is making a move to further its global reach through an application for a virtual asset trading platform (VATP) license with the Hong Kong Securities and Futures Commission (SFC). Application via Fortis DAX HK LimitedA number of months ago, the SFC established a list of both licensed platforms and license applicants. Crypto.com is the latest entity to appear on that list through a locally incorporated entity, Fortis DAX HK Limited. The application was made on Feb. 9, 2024. In this pursuit of regulatory approval in Hong Kong, Crypto.com now joins 16 other exchanges, including notable players like Bybit, Bullish, OKX and VAEX.Photo by Jie Yeu Teoh on UnsplashRegulatory ultimatumThe urgency to obtain a VATP license has become more immediate, given the regulatory ultimatum issued by the SFC recently. A stern warning from the Hong Kong regulator has been issued, mandating that exchanges must apply for the said license by Feb. 29, 2024, with a looming shutdown deadline of May 31, 2024, for those that fail to comply.  Currently, only two platforms, OSL and HashKey Exchange, hold the coveted licenses, underscoring the rigorous process and the importance of compliance in operating within the Hong Kong market.  Despite recent approvals of spot bitcoin exchange-traded funds (ETFs) in the United States and the acceptance of applications for similar products in Hong Kong, regulators are once again asserting their authority in the crypto space, demanding stringent compliance measures to safeguard investors and combat financial crimes.  Julia Leung, the chief executive officer of the SFC, emphasized the importance of regulatory oversight in today's landscape, highlighting the need to protect investors and hold wrongdoers accountable.  In light of these developments, the SFC has issued a cautionary advisory to investors, urging them to verify the regulatory status of the platforms they engage with. While exchanges can continue operating during the application process, investors are encouraged to take proactive measures, such as closing accounts with unlicensed platforms or transferring their assets to SFC-licensed exchanges before the looming deadline.  Licensing and partnerships Despite the regulatory pressures, Crypto.com appears to be navigating the challenges adeptly, leveraging its strategic partnerships and growth initiatives to reinforce its position in the market. In a recent interview, Eric Anziani, the COO of Crypto.com, highlighted the success of the company's collaborations with sports giants like F1 and the UFC, as well as a stadium naming rights deal in Los Angeles that has led to the Crypto.com Arena. These partnerships not only enhance brand visibility but also serve as avenues for attracting new users to the platform. With an approaching user base of 100 million, Crypto.com continues to expand its offerings, recently introducing Crypto.com Prime, an exclusive program tailored for high-net-worth individuals requiring a $1 million deposit. Anziani emphasized the importance of compliance, user convenience and competitive fees, while also acknowledging the diverse trading preferences among users. This license application is the most recent example of Crypto.com’s efforts to expand compliantly. Over the course of the past 12 months, the company has secured trading licenses in Spain, the UK, Dubai and Singapore.