Hong Kong rolls out the red carpet for cryptocurrency exchanges
While some jurisdictions (cough: US) have taken a regulation-by-enforcement approach to cryptocurrencies, others are doing the opposite. According to a June 15 report From The Financial Times, the Hong Kong Monetary Authority is putting pressure on major financial institutions to accept crypto clients. But it's not just regulators rolling out a red carpet to boost the Special Administrative Region (SAR) Web3 industry. In one case, Johnny Ng Kit-Chong, a member of the Hong Kong Legislative Council, wrote 10th of June:
“There has been a lot of news about international virtual asset exchanges in the last two days. I am sending an invitation to welcome global virtual asset exchanges, including @coinbase, to come to Hong Kong, apply for a compatible exchange and negotiate a listing plan. I am willing to provide assistance!”
Similarly, Joseph Chan Ho Lim, Hong Kong Under Secretary for Treasury and Financial Services, revealed in a interview that the Hong Kong Monetary Authority has held public consultations on the launch of stablecoins and is in the process of establishing a regulatory framework by the end of the year. "Hong Kong will continue to support the development of the industry in the future and welcomes industry and talents to come to the SAR," the politician said.
On June 1, the Hong Kong Securities Regulatory Commission issued regulations stipulating the requirements for cryptocurrency exchanges to apply for a license to operate in Hong Kong. For regulated trading platforms, a license application must be submitted to the Securities Regulatory Commission within nine months, or by February 29, 2024. Otherwise, your business in Hong Kong must end by May 31. of 2024.
Bank of China mints debt notes on Ethereum
On June 12, BOCI, the investment banking subsidiary of Bank of China, revealed the tokenization of 200 million Chinese yuan ($28 million) in digitally structured notes on the Ethereum blockchain. The move is reportedly the first act by a Chinese financial institution to tokenize a security in Hong Kong. The bonds are governed by the laws of Hong Kong and Switzerland based on their origin from the Swiss investment bank UBS. Ying Wang, BOCI Deputy Executive Director, commented:
“Working together with UBS, we are driving the simplification of digital asset markets and products for clients in Asia Pacific through the development of blockchain-based digital structured products. We are encouraged by the evolution of Hong Kong's digital economy and are committed to promoting digital transformation."
Previously, UBS had issued a $50 million tokenized fixed rate note in December 2022. Meanwhile, the Hong Kong government issued an HK$800 million ($100 million) tokenized green bond on February 16. of 2023, subscribed by four banks. and appraised with a yield of 4.05% per year.
Do Kwon: In and out of jail
On June 15, the High Court of Montenegro in Podgorica tidy Terraform Labs CEO Do Kwon and CFO Han Chang Joon back in jail pending extradition proceedings to South Korea on charges related to their role in the $40 billion collapse of the Terra Luna ecosystem.
Earlier this month, Kwon and Joon were released on bail of 400,000 euros each in his ongoing passport fraud case after a Montenegrin Basic Court dismissed an appeal by prosecutors.
His brief period on bail was not a happy time either. During his respite from prison, South Korean prosecutors announced that they would request to freeze Kwon and his associates' $13 million in Swiss bank accounts. A new hearing for document falsification is scheduled for June 16 in the same Court of First Instance.
According to local sources, Kwon and Joon will be detained for a period of six months while the court decides on their extradition case. Kwon and Joon also face extradition to the US on 11 counts related to fraud, breach of trust, and embezzlement.
And if that wasn't enough, there's another lawsuit against Kwon. On June 16, Kwon will be questioned by the Special State Prosecutor's Office over a letter he sent from detention to government officials, revealing his connections to Europe Now Movement (ESP) leader Milojko Spajić.
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According to the country's National Security Council, Kwon and Spajić have been friends for five years, last meeting in Belgrade in December 2022. Investigators claim there is evidence of PES campaign financing from Kwon's laptop. If convicted, Kwon not only faces more jail time in Montenegro, but he could also spend up to 40 years in a South Korean prison, and could even expect more jail time in the US. USA
Korean Blockchain Signs Daisy Chain Contagion
On June 14, South Korea's performance platform Haru Invest archived a criminal complaint against its consignment operator B&S Holdings, alleging "fraudulently provided management reports containing false information."
Haru had pause deposits and withdrawals the day before, stating: "We have discovered through our internal inspection process that certain information provided by a consignment operator was suspected of being false." Earlier, concerned investors took photos of reportedly empty corporate offices and accused the company of orchestrating a "rug pull," which Haru says is inaccurate.
The move immediately affected South Korean Bitcoin lending firm Delio, which quickly Announced the temporary suspension of client withdrawals "to safely protect client assets currently in custody," citing problems at Haru Invest. Delio is one of the largest such entities in South Korea, with an estimated $1 billion in Bitcoin, $200 million in Ether, and $8.1 billion in altcoins.
a curious comment regarding the matter came from Jun Du, co-founder of cryptocurrency exchange Huobi Global, who wrote:
“With the detonation of Delio, the thunder of [crypto] the lending platforms are basically over.”
However, Du cautioned that the contagion related to centralized trading platforms, which started with FTX, is just the beginning. “Not only newcomers are confused, but also industry OGs. When will the black box thunder of centralized crypto entities end? asked the former blockchain executive, while also expressing doubts about whether the industry will witness a “crash” or be “driven into a new bull market” after such issues are resolved.
Last year, Huobi co-founders Jun Du and Leon Li reportedly sold 100% of their stake in the exchange to an entity controlled by Chinese blockchain personality and Tron founder Justin Sun. The latter claims that the exchange is now profitable after a period of reorganization, which by the way, included crushing an employee revolt.
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