cryptocurrency exchanges

Creditors of Defunct Crypto Exchange Cryptopia Can Now File For Claims With Audit Firm Following Massive Hack

The creditors of now-defunct New Zealand based cryptocurrency exchange Cryptopia can now file for claims with appointed audit firm Grant Thornton. According to the official announcement released by the audit firm, emails have been sent to the concerned Cryptopia users who are expected to register using the Cryptopia claims portal which is now live.

What happened to Cryptopia?

Cryptopia was a New Zealand cryptocurrency exchange based in Christchurch that was founded by Rob Dawson and Adam Clark in 2014. The early entry of the exchange into the market was cut short when the exchange in January 2019 suffered a security breach which resulted in significant losses amounting to about $16 million. The exchange went into liquidation in May 2019. David Ruscoe and Russell Moore from Grant Thornton New Zealand were appointed liquidators of Cryptopia.

Since then, a lawsuit ensued in which Cryptopia’s customers sued the exchange in a bid to make available their locked-up funds. According to a Blockchain.news report back in April, Justice David Gendall of the High Court in Christchurch, New Zealand, delivered a significant ruling that customers are entitled to the digital assets they held in Cryptopia accounts. The ruling came in recognition of the fact that the exchange was indeed keeping custody of the assets for its customers.

Mishaps such as that suffered by Cryptopia is not uncommon in the cryptocurrency exchange ecosystem of today. From the Asset lock-up owing to the death of the owner of the Canadian-based cryptocurrency exchange QuadrigaCX, to the recent hack of KuCoin exchange, the exchanges in the space are usually predisposed to one form of risk or the other.

While Cryptopia is getting set to make a refund of about $4.2 million according to a Grant Thornton estimation, QuadrigaCX made a settlement of CAD$12 million through Ernst & Young, the audit firm employed in the case.

XRP Price Slumps as SEC’s Ripple Lawsuit Worries India’s Crypto Exchanges

Cryptocurrency exchanges in India have expressed shock by the recent announcement of the US lawsuit against Ripple Labs Inc.

The US Securities and Exchange Commission (SEC)’s suit against Ripple blockchain company has caused a decline of XRP’s price. However, India’s crypto exchanges have shunned restricting their trading on the cryptocurrency, but they are keenly monitoring the issue.

Siddharth Menon, the chief operating officer and co-founder of WazirX India’s biggest cryptocurrency exchange by volume, recognized the SEC’s lawsuit against Ripple as a shocking incident. He said: “Given the uncertainty of this situation, we will continue monitoring the lawsuit development and then take the necessary steps.”

Menon described XRP as one of the most popular crypto assets in India, saying that the token has been among the top trading cryptocurrencies on WazirX.

Apart from that, Neeraj Khandelwal, the co-founder of CoinDCX cryptocurrency exchange, mentioned that they are keenly following the developments and waiting for more information on the concern before they can take a decision.

Crypto experts also made a distinction between XRP and other cryptocurrencies. For example, Gaurav Dahake, CEO of Bitbns crypto exchange, said: “Cryptos like Bitcoin and Ethereum can be mined by anyone. There is no issuer and owner. This was never the case with XRP. Ripple Labs owned 98% of it and issued a little bit every year. The company set the supply (100 billion tokens). This makes it more like a security than a cryptocurrency.”

The lawsuit is also likely to influence regulatory authorities in other nations, including India.

Alleged Illegal Security Offering

The SEC case claims that XRP is a security rather than a currency and therefore the cryptocurrency provider should have sought prior approval from the US securities regulator for intent to launch it. The agency further argues that Ripple blockchain company and two of its executives raised more than $1.3 billion through conducting unregistered digital asset securities offerings.

On December 22, the SEC charged Ripple Labs Inc for an unregistered security offering, claiming that XRP was a security rather than a currency. Firms intending to issue securities in the United States are required by the law to file with the SEC. The lawsuit tussle has caused a drop of the XRP price by 50% from $0.56 on December 21 to about $0.28 on December 24. On December 25, the cryptocurrency traded at about $0.33, a little above its recent lows.

Turkey Government Considers Introducing New Regulations After Collapse of Two Crypto Exchanges

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Turkey is considering new regulations for the crypto market. The development comes after two crypto exchanges abruptly went bust a few days ago.

The collapse of Thodex and Vebitcoin, who among the leading crypto exchanges in Turkey, was a huge blow to thousands of Turkish crypto investors who were unable to access funds worth millions of dollars in cryptocurrencies, after the two exchanges went bankrupt last week.

A senior official familiar with the talks said that the Turkish government is planning to develop a central custodian bank to eliminate counterparty risk.

The official stated that authorities are examining how to create a capital threshold for crypto exchanges and education requirements for executives in such firms.

The official further said that the authorities are set to complete the preparation for a regulatory framework in the coming weeks. The Finance Ministry, the Treasury, the Financial Crimes Investigation Board (MASAK), and the Capital Markets Board (SPK) are said to be involved in the effort.

Uncertainty Around Turkish’s Crypto Policy

It has been a tragic month for the crypto market in Turkey. On April 16, the Central Bank of Turkey issued a ban on the use of cryptocurrencies for payment of goods and services. The central bank stated that transactions conducted through the use of cryptocurrencies presented “irrevocable risks.”

The ban is set to come into effect on April 30.

Last Thursday, Thodex crypto exchange, which is based in Istanbul, stopped its trading activities – an incident that unfortunately resulted in more than 390,000 active customers being unable to access their funds.

The following day, Friday last week, Vebitcoin crypto exchange made an announcement that it halted its operations, citing financial constraints facing the firm.

Police arrested Vebitcoin CEO IIker Bas and three other employees, who are now all part of a wider fraud investigation.

Police also launched a manhunt for Thodex CEO and founder Faruk Ozer, who is reported to have fled to Albania’s capital with around $2 billion of customers’ funds. Interpol issued a red notice for the warrant of arrest of Ozer after Turkish authorities made the request.

On Friday last week, Şahap Kavcıoğlu, the Central Bank governor of Turkey said that the finance ministry and the Treasury are working on wider regulation concerning crypto assets, and stated that the bank does not plan to ban them.

The uncertainty comes at a time when the already rising crypto boom in Turkey gained momentum over the recent year. Many citizens have turned to cryptocurrencies to protect their savings from the depreciation of the Turkish Lira currency and to hedge against inflation.

There is an estimate of 5 million active crypto users in Turkey as of now. In the last 24 hours, the daily trading volume of Turkish crypto markets was estimated to be around $1.6 billion, according to CoinGecko.com.

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SEC Chair Gary Gensler Asks Congress to Regulate Crypto Exchanges

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Gary Gensler, the newly appointed chairman of the US Securities and Exchange Commission, has requested that the US Congress make some major decisions regarding cryptocurrency regulation.

The SEC chair addressed this during a hearing hosted by the House Financial Service Committee, where market volatility surrounding the GameStop stock price jump witnessed early this year was discussed.

Gensler made such comments as a response to a question asked by Rep. Patrick McHenry about what the SEC would do to ensure that the crypto industry remains compliant with the law and conforms with legitimate use cases.

Gensler responded that US investors lack protection when they trade Bitcoin on crypto exchanges. He therefore asked US Congress to consider upping investor protection for crypto exchanges.

Gensler stated that since crypto exchanges do not have a regulatory framework provided by the SEC or the Commodity Futures Trading Commission (CFTC), US Congress was the one responsible for instilling greater investor confidence through regulating crypto exchanges.

Although the SEC’s authority involves regulating digital assets that the regulator considers securities, Bitcoin does not fall under this category.

Gensler stated that Bitcoin is a commodity under US law and is not subject to the SEC’s oversight. He said:

“There’s a lot of authority that the SEC currently has in the securities space, and there are a number of cryptocurrencies that fall within that jurisdiction. But there are some areas, particularly Bitcoin trading on large exchanges, that the public is not currently really protected.”

Without a strong market regulatory oversight on crypto exchanges, Gensler said that there is no protection against manipulation or fraud. He said that the 2 trillion crypto market could benefit from greater investor protection and therefore suggested that Congress play an active role in bringing greater regulatory clarity, especially around exchanges. Gensler said:

“It’s only Congress that can really address it. It would be good to consider whether to bring greater investor protection to the crypto exchanges.”

Regarding the GameStop frenzy, Gensler talked about the role of online communities such as Reddit in boosting stock prices. He however stated that he is not interested in curtailing the freedom of expression, but rather that he was more interested in seeing whether malicious actors took advantage of such communities to manipulate markets.

He disclosed that the SEC plans to release a report this summer evaluating the GameStop trading craze and the reaction to it.

Fixing Gaps in Crypto Industry

Gensler was sworn in as the chairman of the SEC last month. During his nomination, he suggested that more government oversights of crypto assets will be coming. His appointment could have a significant impact on the cryptocurrency industry. Crypto advocates have projected that under his leadership, the US could see a Bitcoin ETF approval and the much-needed regulatory clarity in the field of digital assets.

As a former Commodity Futures Trading Commission chairman and former Goldman Sachs investment banker, Gensler has a great wealth of experience to serve as SEC chairman. What sets him apart from his predecessors is that Gensler is the first blockchain technology and crypto expert to head the SEC. He was a professor who taught the course “Blockchain and Money” at the MIT Sloan School of Management and he regards Bitcoin as a “catalyst for change.”

South Korea Authorities Seize $47M in Crypto from Tax Evaders

Authorities in the South Korean province of Gyeonggi have conducted the largest tax seizures ever, seizing $47 million in Bitcoin (BTC) and Ethereum (ETH).

According to the coverage reported by the Financial Times, the seizure involved about 12,000 tax evaders. The authority has called the action the largest “cryptocurrency seizure for back taxes in Korean history.”

Those “tax dodgers” committed the crime by connecting their trading or investment activities on trading platforms operating in the country with their phone numbers. The process, though rigorous, had to be done manually as crypto exchanges were unable to fully provide the Know-Your-Customer (KYC) details of the defaulting taxpayers. In addition, the FT report was unclear which digital currency trading platform was involved in the investigation.

South Korea has a robust cryptocurrency trading engagement amongst its citizens, and the country has been making moves to implement accomodating regulations. One of these is the law passed by the Korean National Assembly in March 2020. This law mandates cryptocurrency exchanges to take down customer’s details through KYC and obtain licenses to operate from banks.

While big exchanges such as UpBit have been able to comply, other smaller trading platforms have had their struggles in complying, a situation that was compounded by financial institutions dissociating from crypto exchanges. Besides these, South Korea has long been mulling enforcing a 20% capital gains tax on cryptocurrencies, all of which will be made easier with compliant crypto exchanges.

South Korea is one of the more receptive countries to blockchain and cryptocurrency-related innovations. While crypto has thrived in the country in the past decade, the government is taking bold steps to develop its own Central Bank Digital Currency, the Digital Won. Despite its soft stance, however, the nation has zero-tolerance for fraud amongst crypto entities, as showcased in the ongoing raid of Bithumb exchange amidst a broad fraud investigation.

Upbit Becomes the First Exchange to Register with FIU as September Deadline Looms

South Korea’s largest cryptocurrency exchange, Upbit, has leapt to become the first digital currency exchange for registering with the Financial Intelligence Unit (FIU)- the country’s market regulator.

As unveiled by the government body, the move comes after the exchange completed the requirement to meet the registration, which includes partnering with a local bank to capture customers data for Know Your Customer and Anti-Money Laundering controls.

According to earlier reports, several cryptocurrency exchanges operating in South Korea were having trouble setting up a partnership with banks. The entire crypto sector faces headwinds on the impending regulations. When the September 24 deadline comes, the FIU will take down the websites of exchanges that have not yet registered, and access to these exchanges by local consumers will be significantly impacted.

On the part of Upbit, its partnership was with K-Bank, a digital bank that will help facilitate real name verification. As reported, other named exchanges, including Bithumb, Coinone, and Korbit, have also secured a similar partnership, and are on track to register with the FIU before the deadline. The review of the application period for Upbit is three months. However, the exchange has bought itself time with the filed registration.

South Korea is taking its digital currency regulations very seriously. The same rules that bind local exchanges are also applicable to their foreign counterparts. In a move to wade off regulatory reprimand, Binance exchange removed all cryptocurrency trading pairs involving the Korean Won from its site. The inability to meet the regulatory standards have also pushed OKEx exchange to shut down its operations in the Asian country.

There is currently a frantic race amongst crypto stakeholders in South Korea to meet the regulators’ demand. The population is highly crypto-centric, and exchanges that scale the FIU’s demands are bound to see a boosted market with less competition.

US SEC Chair Gary Gensler: Coinbase and Other Crypto Exchanges Must Register with Agency

The US Securities and Exchange Commission Chairperson Gary Gensler has stated that cryptocurrency exchanges should come in and talk to the market regulator. The SEC boss made such a statement just a few days after aiming for the Coinbase trading platform over one of its products.

Gensler appeared before the Senate Banking Committee on Tuesday, September 15, where he intensified the pressure on cryptocurrency exchanges, saying he would like to regulate them.

The SEC chair warned that cryptocurrency exchanges like Coinbase should register with the regulator, which he previously raised concerning whether cryptocurrency trading platforms qualify as securities exchanges.

Gensler mentioned that exchanges should register with the agency, as some of their tokens or products may be securities, unlike Bitcoin, which regulators think is more like a commodity.

“I’ve suggested that platforms and projects come in and talk to us. Many platforms have dozens or hundreds of tokens on them,” Gensler said. “There are securities on these trading platforms; under our laws, they have to register with the Commission unless they qualify for an exemption,” he added.

In his prepared remarks for the committee, the SEC’s Chairman talked about the need for cryptocurrency trading platforms to register as securities trading platforms.

While Gensler did not mention any specific companies, he reiterated that any exchange that has security listed must register with the SEC.

Crypto Regulation Problem

The announcement from the US SEC comes a few days after the commission told Coinbase Global Inc that it plans to sue the crypto exchange if it goes ahead with plans to launch a program that allows users to earn interest by lending digital assets.

On September 9, Gensler stated that products that bear a specific interest-rate return could fall under SEC oversight as securities and also hinted that some stablecoins should also fall under that category.

During that time, the SEC threatened to sue Coinbase if the cryptocurrency exchange goes ahead with its program called “Lend”, which allows users to earn interest by lending crypto assets.

Coinbase now plans to delay the launch of its “Lend” product until at least October.

In response, Coinbase CEO Brian Armstrong criticised the commission’s handling of the exchange’s plan to roll out a lending product, which the SEC has determined to be a security.

Armstrong accused the commission of “really sketchy behaviour” and stated that he failed to see how the lending product was security. He disputed the SEC’s determination, saying “Lend” is not an investment contract or note. Armstrong stated that Coinbase was threatened with legal action before the SEC gave a single bit of actual guidance to the crypto industry.

Meanwhile, crypto-industry figures and some lawmakers need the SEC to clarify what it thinks it can and can’t regulate.

In his prepared remarks, Gensler stated that the SEC is working with the Federal Reserve, the Treasury, the commodities regulator, and other agencies on a regulatory framework.

Japan's FSA Warns Binance and Others for Operating Without Registration

Japan’s Financial Services Agency (FSA) has issued a warning letter to several foreign cryptocurrency exchanges, including Binance, Bybit, MEXC Global and Bitget, for conducting business in the country without proper registration, violating the nation’s fund settlement laws. The FSA stated that the listed exchanges had breached Japan’s fund settlement regulations by conducting crypto asset exchange business without proper registration.

This action by the FSA follows a crackdown on unregistered crypto exchanges in the East Asian nation. In 2020, the FSA introduced new regulations requiring crypto exchanges to register with the agency and obtain a license to operate in Japan. However, the regulator clarified that the current list of unregistered traders may not accurately represent the current state of unregistered businesses.

The warning issued to Binance is significant, as it signifies that the cryptocurrency industry in Japan and other nations is facing greater regulatory scrutiny. Unregulated cryptocurrency exchanges pose risks such as fraud, money laundering, and market manipulation, which are concerning regulators more and more.

Although Japan is working on new regulations for the crypto and Web3 sectors, the country has not cracked down on the industry as hard as some other larger economies, such as the United States. However, the FSA’s actions show that it is taking steps to ensure that the cryptocurrency industry in Japan operates within a regulated framework.

Binance, one of the world’s largest cryptocurrency exchanges, has been facing regulatory pressure in various countries. The U.S. Commodity Futures Trading Commission (CFTC) recently sued Binance and its founder, Changpeng Zhao, for regulatory violations. The FSA also issued a formal warning letter to Binance for operating without necessary permissions back in 2021.

In conclusion, the warning letter issued by Japan’s FSA to several foreign cryptocurrency exchanges, including Binance, signifies that the industry is facing greater regulatory scrutiny. As the cryptocurrency industry continues to grow, it is essential for regulators to take steps to ensure that it operates within a regulated framework to mitigate risks and protect investors.

Taiwan's Legislature Considers Virtual Asset Management Bill to Protect Consumers

On October 25, Taiwanese legislators tabled the Virtual Asset Management Bill before the single-chamber parliament, the Legislative Yuan. This initiative seeks to bolster consumer protection and furnish better oversight over the burgeoning digital asset sector.

The 30-page document delineates several pragmatic obligations for Virtual Asset Service Providers (VASPs). Noteworthy mandates include the segregation of client funds from the firm’s operational reserves, the inception of an internal audit and control system, and membership in local trade associations pertinent to digital assets. Although the bill is seen as moderate, it forgoes the imposition of a 1:1 reserve requirement for stablecoin issuers and does not delve into the realm of algorithmic stablecoins.

The legislation also outlines penalties for unlicensed VASPs operations, establishing fines ranging from 2 million Taiwanese dollars (approximately $60,000) to 20 million TWD (around $600,000). Existing market participants have been granted a six-month window post-enactment to secure the necessary licensure.

This legislative venture follows the September 2023 guidelines issued by the Financial Supervisory Commission (FSC) of Taiwan, which barred foreign VASPs from operating within Taiwanese jurisdiction without requisite approvals. This move comes amidst the formation of a self-regulatory body by major crypto exchanges within Taiwan on September 26. Prominent local exchanges like MaiCoin, BitstreetX, Hoya Bit, Bitgin, Rybit, Xrex, and Shangbito congregated to establish the Taiwan Virtual Asset Platform and Transaction Business Association, aiming to foster a collaborative environment between the crypto industry and regulatory bodies.

In juxtaposition with the more stringent regulatory frameworks seen in neighboring Hong Kong and Japan, Taiwan’s proposal appears more lenient. Unlike Hong Kong’s rigid stance on derivatives and stablecoins, and Japan’s requirement for the employment of custodians by locally accredited exchanges, the Taiwanese bill merely emphasizes the separation of client and company funds.

Furthermore, the bill mandates periodic reporting by exchange operators, although it doesn’t specifically address Proof of Reserves. It leaves room for the regulatory body to devise asset ratio rules post consultations with industry stakeholders. This nuanced approach reflects a measured stride towards establishing a regulatory framework post the collapse of the FTX exchange in November of the previous year, which had garnered a significant user base in Taiwan due to its favorable interest rates on US dollars compared to local banking offerings.

Preliminary feedback from the crypto sector in Taiwan displays a positive outlook towards the inception of formal regulatory supervision, which is seen as a constructive step towards legitimizing the industry.