Our weekly roundup of news from East Asia curates the industry’s most important developments.
Creditors of bankrupt Singaporean hedge fund Three Arrows Capital (3AC), who are owed a combined $3.3 billion in claims, may have finally received some respite this week with the help of Sam Altman.
That’s because Altman’s Worldcoin (WLD) soared by over 200% this week, which observers linked to the launch of OpenAI’s Sora video tool. The rally saw the WLD wallet address held by 3AC liquidator Teneo surpass $700 million,
3AC co-founder Zhu Su was thrilled at the rally. “Got hated on a lot for this Worldcoin investment in 2021,” he said. “I remember the hit pieces on it were so bad most of the seed rd refused to tweet to support it.”
“I won’t be benefiting from WLD outperformance, but I’m glad 3ac creditors have one of the largest positions in WLD in the world.”
However, there is a catch. 3AC’s wallet balance, although not currently part of circulation, is equivalent to around 90% of the token’s current market cap, meaning a significant likelihood of a flash crash if creditors hypothetically tried to cash out.
Similarly, 3AC liquidators received around 134.78 million tokens of Ethereum layer-2 solution Starknet (STRK) previously in December 2022. During its official an airdrop this week, the liquidators’ STRK balance reached a high worth of $943.46 million at its peak when STRK trading opened on Binance. The token has since lost 74% of its value.
In December, a British Virgin Islands court froze $1.14 billion worth of 3AC’s leftover assets, and bankruptcy proceedings are currently ongoing.
The Chinese Communist Party (CCP) is taking aim at foreigners allegedly using crypto as a means to facilitate intelligence gathering in mainland China.
According to a report by the Ministry of State Security (MSS), the CCP’s national security department, foreign map companies are allegedly posting crypto bounties to incentivize mainland Chinese contractors to purchase surveying equipment and transmit real-time geographical secrets in the country to offshore servers.
“Some people within the country have a weak awareness of national security and are tempted by the way of making money by surveying maps,” the MSS wrote.
“They are unknowingly used by overseas companies with ulterior motives and become accomplices in their illegal collection and theft of geospatial data.”
Currently, foreign companies seeking geographical surveying in China must receive prior approval from the country’s military authorities, or face harsh penalties under the nation’s anti-espionage laws. Over the past year, China has cracked down harshly on any crypto-related activities due to an increasing presence of technology in the country’s money laundering and financial crimes.
USD Coin (USDC) issuer Circle is discontinuing minting support for its native namesake stablecoin on Tron.
As announced on Feb. 20, the firm will no longer mint any new USDC tokens issued under the TRC-20 standard. Users have until February 2025 to swap their TRC-20 USDC for other assets, and bigger holders can redeem them directly with Circle on a 1:1 ratio for U. S. dollars.
“As Circle only serves business and institutional customers, retail users and other non-Circle customers can move their USDC on Tron to an exchange or distributor where it can be transferred to another blockchain where USDC is supported,” the firm wrote.
Around $335 million worth of USDC is currently minted on the Tron blockchain. While Circle did not specify any reasons for the discontinuation, the Tron blockchain has come under regulatory scrutiny as of late. Last year, the United States Securities and Exchange Commission sued Chinese blockchain personality Justin Sun for allegedly selling Tron tokens (TRX) as unregistered securities and inflating trading volume on its blockchain. The lawsuit is ongoing.
Cointelegraph contacted Tether about whether it would withdraw support for Tron, but they danced around the issue and would neither confirm nor deny it.
Huobi HK, the Hong Kong subsidiary of cryptocurrency exchange HTX (formerly Huobi Global), another corporate entity that is de facto owned by Justin Sun, has applied for a retail crypto trading license in the city. In an updated applicant list with the Hong Kong Securities & Futures Commission (SFC), Huobi HK is currently listed along with other centralized exchanges such as Crypto.com, Bybit and OKX.
Huobi Global is currently embroiled in a trademark dispute with X-Spot Global Limited, another crypto firm created by its co-founder Leon Li, over its use of the Chinese-equivalent “Huobi” trademark in Hong Kong.
In May 2023, Justin Sun published a series of allegations against Wei Li, Leon Li’s brother. In the tweet, Sun accused Wei of receiving millions of Huobi Tokens through “abnormal means” at zero cost and of “consistently selling off these HT tokens and cashing out.”
On Huobi HK, users are able to trade Bitcoin, Ethereum, altcoins and various stablecoins. However, access is only permitted to residents of Hong Kong who qualify as professional investors and to financial institutions. Despite there being nearly 20 applicants who wish to license exchange trading for retail investors, only two firms, OSL Exchange and Hashkey Exchange, have been granted a license since last August.
The Hong Kong Monetary Authority (HKMA) has set forth new rules for the city’s digital asset custodians to be implemented by August.
According to its Feb. 20 guidelines, authorized institutions (AIs) must distribute the crypto private keys holding access to hot and cold wallets to multiple personnel so that “no single party controls the entirety of the key.”
In addition, a certain majority of members must collectively sign on transactions to ensure that no single person has full access while preventing operational interruption when a single shard is lost.
“An AI should closely monitor the trends and developments in emerging security threats, vulnerabilities, attack, and fraud risks as well as technological solutions; evaluate periodically the adequacy and robustness of the security risk controls having regard to the emerging threats and technological advancements; and put in place measures to keep the technology to safe keep client digital assets in line with relevant industry best practices and applicable international standards.”
AIs will not be able to delegate custody of digital assets to other firms, such as DeFi protocols, unless they are licensed by the SFC. “It is the AI’s responsibility to ensure that the delegate or service provider segregates client digital assets properly,” the SFC wrote.