Thailand’s SEC takes legal action against former Zipmex CEO

India’s judiciary turns down plea to formulate a crypto regulatory frameworkThe Indian courts have declined a consideration targeting the establishment of a regulatory framework for cryptocurrency trading, following a plea which had been brought to court by a petitioner.Photo by Naveed Ahmed on UnsplashBeyond the court’s purviewIndia’s Supreme Court, led by Chief Justice Chandrachud, recently confronted a petition urging the establishment of a regulatory framework for cryptocurrency trading. According to a local media report, the bench, which included Justices JD Pardiwala and Manoj Misra, dismissed the plea, emphasizing that the demands presented were legislative and thus beyond the court’s direct action purview. This decision points to the judiciary’s recognition of its constraints in crafting laws, particularly in intricate domains like cryptocurrency.The petitioner, Manu Prashant Wig, a former director at Blue Fox Motion Picture Limited currently in custody due to allegations of cryptocurrency fraud, sought relief through a public interest litigation (PIL) for crypto trading regulations in India.The Economic Offence Wing (EOW) of the Delhi Police accused Wig in 2020 of deceiving investors with promises of high returns from crypto investments, involving 133 reported victims of the scheme. Despite this, during the hearing, the Supreme Court advised Wig to pursue legal remedies through appropriate channels, specifically for bail, underlining its inability to issue directives under Article 32 of the Constitution for legislative matters.Judiciary criticize governmentWhile the judiciary has found that it cannot act itself in putting in place a crypto regulatory framework, the Supreme Court has been critical of the government’s inaction on the matter. In July, India’s highest court criticized the Indian government for its failure to establish clear cryptocurrency regulations.Interestingly, while the government hasn’t acted locally, it has been making efforts to drive regulation at an international level instead. The status of cryptocurrency trading in India remains uncertain, with the country developing a regulatory framework influenced by recommendations from the International Monetary Fund (IMF) and the Financial Stability Board (FSB), potentially leading to legal legislation within the next several months.Prime Minister Modi called on authorities internationally to establish a worldwide regulatory framework. At the recent G20 summit, it appears that member states did reach agreement on such a framework.The Supreme Court’s dismissal of the PIL marks a clear distinction between judicial and legislative responsibilities. As India moves closer to formulating a comprehensive crypto regulatory framework, this decision reinforces the imperative for legislative action to address mounting concerns and interests in the crypto market.Awaiting legislative actionThe outcome of these developments is keenly awaited by investors, legal experts and the crypto community, poised to shape the future landscape of cryptocurrency trading in India. The decision signifies the judiciary’s acknowledgment of its limitations and highlights the necessity for a legislative approach to effectively navigate the intricate landscape of cryptocurrency regulation.In this evolving scenario, the verdict amplifies the importance of a well-defined regulatory framework. As the world’s most populous country grapples with the delicate task of balancing innovation and investor protection, the Supreme Court’s decision places the ball firmly in the legislative court.

North Korea Using DeFi for Money LaunderingThe United States Treasury issued a warning on Thursday where it identifies North Korea as a user of DeFi services for money laundering. According to the Treasury, both North Korea and criminal organizations have been using DeFi platforms to launder dirty money.©Pexels/PixabayWhile DeFi has been praised for its potential to democratize finance and provide greater financial freedom to users, it has also been criticized for its lack of regulatory oversight. According to the Treasury, this lack of oversight has made DeFi platforms an attractive target for money launderers and other criminal organizations.In its warning, the Treasury noted that North Korea has been using DeFi platforms to launder money and evade international sanctions. The country is believed to have developed a sophisticated system for laundering money through cryptocurrency exchanges, and it is now turning its attention to DeFi platforms.Illicit money movementCriminal organizations are also using DeFi services for money laundering, according to the Treasury. These groups are said to be using DeFi platforms to move money around the world, in order to avoid detection and to launder the proceeds of their illicit activities.The use of DeFi for money laundering poses a significant challenge for law enforcement agencies, as these platforms operate outside of the traditional banking system and are often difficult to track. The Treasury has urged DeFi platforms to implement strong anti-money laundering (AML) and know-your-customer (KYC) policies, in order to prevent their services from being used for criminal activities.The warning from the Treasury comes at a time when DeFi is becoming increasingly popular among investors and users. According to data from DeFi Pulse, the total value locked in DeFi protocols recently surpassed $100 billion, indicating a significant level of interest and investment in the sector.Calls for greater regulationHowever, the lack of regulatory oversight and the potential for DeFi to be used for money laundering and other criminal activities have raised concerns among regulators and policymakers. Some have called for greater regulation of the sector, in order to prevent its abuse by criminal organizations.Despite these concerns, many proponents of DeFi argue that the sector has the potential to transform the financial industry and provide greater financial freedom to users. They point to the benefits of decentralized systems, such as greater transparency, lower fees, and faster transaction times.The use of DeFi for money laundering is a complex issue that requires a multifaceted approach. While regulators and policymakers must work to implement strong AML and KYC policies, users and investors must also take responsibility for ensuring that they are using DeFi platforms in a responsible and legal manner.Ultimately, the future of DeFi will depend on how the sector is able to balance innovation and regulation. While DeFi has the potential to transform the financial industry, it must also be subject to appropriate oversight and accountability in order to prevent its abuse by criminal organizations.By working together, regulators, policymakers, and industry stakeholders can help to ensure that DeFi is used for its intended purpose — to provide greater financial freedom and empowerment to users around the world.

A Chinese creditor of failed crypto exchange FTX has filed an objection on his own behalf and that of 300 others, with a U.S. bankruptcy court against a motion lodged with a view towards excluding payouts to creditors resident in China, Russia and 47 other foreign jurisdictions.Photo by Mariia Shalabaieva on UnsplashPotential distribution forfeitureThe FTX Recovery Trust, an entity formed in January to oversee the FTX bankruptcy estate following the adoption of a plan of reorganization, filed a motion last week seeking the approval of the Delaware Bankruptcy Court in the United States to adhere to new parameters related to the claims of creditors residing in restricted overseas jurisdictions. Besides China and Russia, the list of restricted jurisdictions also includes many within the Asian region, including  Afghanistan, Iran, Iraq, Macau, Myanmar (Burma), Nepal, North Korea, Pakistan, Qatar, Bangladesh and Cambodia. The FTX estate claims that these jurisdictions have regulations and laws restricting cryptocurrency transactions. In such cases, the FTX Recovery Trust claims that it cannot break local laws.  The difficulty for creditors resident in these countries is that if it's deemed illegal to reimburse them, they won’t qualify for the next scheduled distribution from the estate. In that instance, distribution forfeiture will be triggered. Taking to X on July 7, FTXcreditor.com, an entity that has been buying up bankruptcy claims from FTX creditors over the course of the FTX bankruptcy process, highlighted the peril that creditors residing in these restricted countries may face. It stated: “Distribution forfeiture is triggered at every distribution record date. The first record date already passed, if your claim is still tied to a local KYC when the stamp drops, that tranche is potentially gone.” Short timeframe for objectionsMr. Purple, a pseudonymous distressed assets bankruptcy professional who has been advocating for FTX creditors since the collapse of the business in November 2022, concurred with this view in a subsequent post on X. He pointed out that an extremely short timeframe has been given to affected creditors to respond. The motion was filed on July 2 and objections are due by July 15. $500 million in claims are at stake which accounts for 5% of all creditor claims. Of this, 82% of these claims belong to Chinese creditors. In a series of follow-up posts, the bankruptcy professional describes several procedural issues that he believes will result in it being incredibly difficult for affected creditors to have their funds reimbursed.Mr. Purple concludes:”The incentives are designed to be extremely risk averse in finding [a legal opinion] that paying creditors is legal! [The estate’s lawyers will] take the fees and say its not legal.” In his court filing, the Chinese creditor, who is resident in Singapore, stated: “My family holds four KYC-verified accounts with aggregate claims exceeding $15 million USD.” . . . “We have fully complied with every procedural requirement under the Plan. The proposed motion now jeopardizes our right to distribution in an arbitrary and inequitable manner.” On X, he asserted that the FTX Recovery Trust’s motion “constitutes an impermissible and material modification of the Plan.” Aside from legal action, the only other potential solution for creditors residing in restricted countries is to sell their claims. However, claims buyers are pricing in greater risk with lower rates and less favorable terms.