Blade Entertainment partners with Cardo to venture into tokenized securities industry

Korea’s Legislative Research Body Suggests Expanding Blind Trust System to Include CryptoThe National Assembly Research Service (NARS) of South Korea last Friday issued a report emphasizing the need to broaden the scope of the country’s blind trust system for public officials. Currently, this system primarily covers traditional stocks, but the report highlights the necessity of extending its coverage to include cryptocurrencies.Photo by O-seop Sim on PexelsPublic Service Ethics ActUnder the existing Public Service Ethics Act, public officials holding a rank of 4 or higher within the finance department of the Ministry of Economy and Finance and the Financial Services Commission are mandated to either divest themselves of stocks linked to their official duties and responsibilities or transfer them into a blind trust if the total value of these stocks exceeds KRW 30 million (about $23,000).Blind trustA blind trust is a mechanism through which a public official transfers their stock holdings to a trustee. Subsequently, the trustee handles these entrusted stocks by exchanging them for other assets and overseeing their management, administration, and disposition. Importantly, the original owner of the stock, who is the public official, is barred from participating in these aspects of the trust and is also kept uninformed about the trust property’s status or details.Debate over expansionThe current policy confines the blind trust framework exclusively to stocks. Nevertheless, there is an ongoing debate advocating for the inclusion of other assets, such as virtual assets and real estate, within its scope. The rationale behind this argument is that these types of assets can also potentially give rise to conflicts of interest. However, counterarguments have been raised, expressing concerns that extending the blind trust to these assets could excessively limit the property rights of public officials. Consequently, as of now, this broader application has not been implemented.Comparison with the USThe Korean blind trust system was inspired by the United States’ Ethics in Government Act of 1978, which does not limit the types of assets that can be included in a blind trust. In the US, a blind trust can encompass not only stocks but also bonds, mutual funds, virtual assets, and real estate. In light of this, the report recommends the expansion of the blind trust system to encompass virtual assets and real estate. This step is proposed to prevent conflicts of interest among public officials pertaining to a wider array of asset types.Enhancing trustee discretionMeanwhile, NARS also argued for broadening the trustee’s discretion in trust management to render the system more reasonable. This stems from the concern that the existing uniform property sale approach could lead public servants to incur losses. NARS has proposed potential solutions, such as extending the time limit for property sales or mandating the sale of only a portion of the assets, as viable options to address this issue.

HeyBit to Cease Virtual Asset Deposit Services in OctoberSouth Korean centralized finance (CeFi) company HeyBit announced on Monday that it will terminate its virtual asset deposit service, Harvest, on October 2 in line with regulatory guidelines.Photo by Andre Taissin on UnsplashRegulatory limitations“Although we have made efforts to pay promised returns and provide stable digital asset investment products, we have ultimately decided to terminate the Harvest service in accordance with the policy guidelines of regulatory authorities,” the company said in a statement.It further emphasized that the service termination is solely due to regulatory restrictions, rather than questions of financial integrity or credit issues, while also citing its judgment call that running a deposit business is practically impossible at the moment.“Although some customers of other businesses have faced damages due to operational issues, the results of our due diligence report for the second quarter of 2023 were consistent with that of our last four reports, stating that the value of the assets we own exceeds that of deposited assets,” HeyBit said, seemingly referring to the recent class-action lawsuits against the Korean crypto platforms Haru Invest and Delio, who had unexpectedly suspended customer deposits and withdrawals, inciting KRW 50 billion (approximately $39 million at the time of the incident) in damages in the process. The company stressed that it was unrelated to this debacle and was securely storing all customer assets, alleviating potential investor concerns.The company has thus been able to properly handle management operations involving promised returns, additional deposits, and withdrawals for Harvest users up until now.However, it has decided to comply with the Virtual Asset User Protection Act, which is set to take effect next year in Korea. Article 7, Paragraph 2 of this act outlines that virtual asset companies must keep their own virtual assets and customers’ virtual assets separate, and they must own the same quantity and type of virtual assets — including deposited assets — as those that have been entrusted by customers.“We are thus unable to use the assets entrusted to us by our customers as a source of return,” HeyBit said.Planned reboundDespite this setback, the company promised to resume services based on regulatory and policy changes in the future, including revamping virtual asset deposit services.

In the aftermath of the massive $235 million hack of the WazirX cryptocurrency exchange on July 18, users and stakeholders are grappling with its devastating consequences. The breach, which compromised a significant portion of the exchange’s reserves, has led to a series of legal, financial and security-related challenges, leaving millions of users uncertain about the future of their funds. The hack and its aftermathWazirX, once a leading Indian cryptocurrency exchange, lost approximately $235 million due to a breach in one of its multi-signature wallets. This included significant amounts of Shiba Inu (SHIB), Ethereum (ETH) and other assets. The hack crippled the exchange, forcing it to temporarily shut down operations and seek a restructuring process under Singapore's insolvency laws. The WazirX hacker has since begun laundering the stolen assets through Tornado Cash, a crypto mixer known for obscuring transaction details. According to blockchain security firm Cyvers, the hacker transferred over 5,000 ETH (approximately $12 million) to a new wallet and laundered $10 million in Ethereum through Tornado Cash. This mirrors the tactics of the North Korea-backed Lazarus Group, which has used similar methods in past high-profile crypto thefts. Photo by GuerrillaBuzz on UnsplashUsers seeking redress and government interventionAs the victims of the hack face uncertainty, over 4 million active WazirX users are expected to suffer a loss of at least 43% of their funds due to the restructuring process. Frustrated by the lack of action from Indian authorities, many users have sought help from Indian Prime Minister Narendra Modi, who was visiting Singapore at the time. Users took to social media to air their grievances and demand justice, urging the government to intervene. WazirX co-founder Nischal Shetty, who is based in Dubai, added to the confusion by stating that he does not know who is responsible for safeguarding user crypto funds on the platform. His statement has fueled outrage among users, who feel abandoned by the exchange’s management. Legal and ownership disputesAmid the chaos, WazirX is also battling a legal dispute over its ownership with Binance, the world’s largest cryptocurrency exchange. Shetty has repeatedly claimed that Binance acquired WazirX, granting it significant control over the platform's operations. However, Binance founder Changpeng Zhao (CZ) refuted these claims in 2022, stating that the acquisition deal was never completed. The uncertainty surrounding the ownership of WazirX has further aggravated users, many of whom are demanding a clear statement from Binance. So far, Binance has remained silent, neither confirming nor denying its involvement. This ambiguity has intensified calls for clarification, with users fearing that a lack of transparency may worsen their chances of recovering their funds. Partial withdrawals and restructuring effortsIn response to the crisis, WazirX has initiated phased withdrawals for users, allowing them to access 66% of their Indian Rupee (INR) token balances. Initially set for September 9, the withdrawal window was moved forward, offering some relief to users. However, many are dissatisfied with the partial access to their funds and are questioning when full crypto withdrawals will resume. WazirX’s legal team has indicated that users may recover only 55% to 57% of their crypto holdings, sparking further discontent. Meanwhile, the exchange has filed a moratorium application in the Singapore High Court, seeking a six-month reprieve from legal actions as it works on a restructuring plan. Looking aheadAs the WazirX saga unfolds, the future of the exchange and its users remains uncertain. The legal battles, ownership disputes and the ongoing laundering of stolen assets pose significant challenges to the platform's recovery. For now, users can only hope that the restructuring process will bring them closer to recovering their lost funds and that authorities will step in to provide clarity and resolution.