Our weekly roundup of news from East Asia curates the industry’s most important developments.
On Aug. 11, a Chinese individual known only as Mr. Chen was sentenced to nine months in prison after helping his friend, Mr. Lin, purchase 94,988 Chinese yuan ($13,104) worth of Tether (USDT) and earning a commission of 147.1 Yuan ($20.24).
Because Mr. Chen shared his personal bank information for the peer-to-peer fiat-to-crypto transaction, Chinese authorities considered the act to be money laundering and imposed a harsh sentence.
Chinese judge explains in a prior case why a Bitcoin lending agreement was legally invalid even in the event of a breach of contract. (Jstv)
Officially, Chinese authorities attribute the tough-on-crypto approach to a spree of data theft and the use of crypto to launder proceeds of crime. However, sources tell Cointelegraph that the crackdown is more related to the country’s stringent capital control rules, where Chinese nationals are prohibited from buying more than $50,000 worth of foreign currencies each year without a state permit. The same applies to large-sum Chinese yuan transactions with foreign banks.
The capital controls had been almost complete until the advent of crypto, sources say. The problem is further exasperated by a looming recession in China, making senior government officials wary of further money moving out of the country.
In July, Jingmen municipal police were tipped off about an online poker platform operating in the city. Raiding the offices, police discovered the group had “laundered” over 400 billion Chinese yuan ($54.93 billion) worth of gambling funds using cryptocurrencies and involving over 50,000 individuals.
However, the underlying criminal act that resulted in the “tainted money” was never mentioned. Unlike other jurisdictions, the act of gambling itself and the transfer of currencies abroad without applicable permits are deemed to be illicit activities. According to user reports, fiat-to-crypto transactions stemming as far back as 2021 are currently being audited by “special police task forces.”
Crypto projects and their Chinese founders are also disappearing at an alarming rate. The well-known Multichain incident aside, in May, employees of Chinese offshore yuan stablecoin issuer CNHC were detained by police following an office raid. They have not been heard from since. Commenting on the story, Wuwei Liang, a former employee of defunct crypto exchange CoinXP, claimed:
“Suddenly, despite there being no complainants nor victims, the Wuxi police who came to Beijing from across the province took away all the members of the CoinXP team of China’s domestic blockchain entrepreneurial team.”
Liang further alleged that Chinese police would resort to “intimidation” to force a confession and the surrender of a project’s private key. Armed with this as “evidence” police then charge the co-founder with “fraud and multilevel marketing,” bringing about a sham trial where the accused is convicted, resulting in the seizure of enterprise and user funds alike. (These allegations have not been proven in court.) We reported earlier on allegations of intimidation, detention, and even suggestions of the “kidnapping” of the defense counsel at the ongoing CoinXP trial.
CBDC printer goes brrrr
Don’t misinterpret the Chinese government, however; they are quite fond of blockchain, so long as they are the ones in charge.
In the interest of revitalizing China’s ailing economy via consumer spending, government officials have recognized the role of the Chinese yuan central bank digital currency and made its adoption a political priority. On July 27, the city of Suqian airdropped 20 million ($2.75 million) of digital yuan shopping vouchers to residents.
This was followed by a 10 million ($1.37 million) digital yuan food voucher airdrop by the city of Hangzhou, a 40 million ($5.49 million) digital yuan airdrop by the city of Shaoxing, a 30 million ($4.12 million) digital yuan airdrop by the city of Jianyang, and a 3 million ($0.412 million) digital yuan airdrop by the city of Ningbo, all within less than two weeks. At one test site in Chengdu, China’s largest food delivery platform, Meituan, reported a 65.5% daily increase in the number of digital yuan transactions on its platform.
So there are definitely real-world results to help revitalize the economy — something desperately needed right now. On Aug. 15, China announced it would stop reporting its youth unemployment figures after the metric reached a record 21.3% in June. Perhaps we can expect the (blockchain) printer to go brrr in the months ahead?
Chinese President Xi Jinping explains during the Shanghai Cooperation Summit why ‘”friendly nations” such as Belarus and Iran should develop their own CBDCs. (CCTV)
3AC creditors suffer humiliating defeat
Lawsuits can be tough, especially when it comes to matters such as liquidating a $3.5 billion Singaporean hedge fund through multi-jurisdictional litigation. This is why a high level of competency is generally required for the attorneys who take part in such proceedings.
And so, creditors of Three Arrows Capital (3AC) were dealt a significant setback on Aug. 11, when United States Bankruptcy Judge Martin Glenn said civil contempt rulings against 3AC co-founder Kyle Davies were invalid.
Judge Glenn explained that the subpoenas issued by law firm Teneo on behalf of creditors to Davies via Twitter starting in December were made on the basis that Davies held U.S. citizenship. However, it emerged earlier this month that Davies’ renounced his U.S. citizenship to acquire Singaporean citizenship a few years prior.
“Because Mr. Davies’ United States citizenship was a prerequisite for valid service on him in the manner effected, he was not properly served with the subpoena issued by this Court.”
As a result, the U.S. court could not exercise jurisdiction against Davies, with Judge Glenn suggesting that creditors’ attorneys bring a motion to a Singaporean court to compel Davies’ compliance instead. It has been over a year since 3AC filed for bankruptcy.
In other words, after one year’s time, creditors have just found out that the jurisdiction where they filed to claim debtors’ assets had no jurisdiction over the debtors. 3AC co-founder Zhu Su, by the way, also has Singaporean citizenship and cannot be compelled by U.S. courts on this matter.
3AC co-founders Kyle Davies (left) and Su Zhu (right). (X/Twitter)
Now don’t get me wrong, everyone makes mistakes, but often trivial mistakes have trivial consequences. Unfortunately, that wasn’t the case here. Since the inception of proceedings, 3AC creditors have reportedly spent millions in legal fees, with some estimates going as high as $30 million. The proceedings have so far led to the recovery of several nonfungible tokens (NFTs) owned by 3AC, which were sold at two Sotheby’s auctions for a combined … $13.4 million.
In the last week, the liquidators of 3AC have spent millions in legal fees to find out:
(1) Kyle Davies is not a US citizen (2) 3AC and DeFiance Capital operate out of Singapore
Both nuggets of infomation are available on a document you can purchase for SGD 5.50. https://t.co/HZK5JjUFKS
In another setback, a Singaporean court ruled on Aug. 15 that the city-state would be the convenient forum for hearing 3AC creditors’ $140 million dispute with DeFiance Capital, and not the British Virgin Islands as suggested by Teneo. 3AC creditors allege that funds held with DeFiance Capital belong in the estate of 3AC, while DeFinance Capital says that its assets belong to its independent investors. Commenting on the double whammy, Su Zhu wrote:
“As the current acting liquidator for 3AC, we believe Teneo is repeatedly overreaching in their attempt to seize other investors’ funds. Even on a technical and legalistic approach, the DC [DeFiance Capital] and SNC assets rightfully belong to the feeder funds of 3AC,”
But in the overall context, winning a battle is easy; winning a war is difficult. On Aug. 16, Dubai regulators reminded Davies and Zhu that their new OPNX exchange for trading crypto bankruptcy claims remains unregistered in the Emirate and, correspondingly, faces a 10 million Dirham ($2.72 million) penalty for operating without a proper license.
Unlike in the U.S., Davies and Zhu actually own assets in the UAE vulnerable to seizure, including Davies’ prized chicken restaurant. Whether the co-founders can really keep their assets sheltered from the path of angry creditors (and regulators alike) remains to be seen.
Just before we published Asia Express, 3AC liquidators filed a committal order against Zhu Su in the court of Singapore.
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Zhiyuan Sun
Zhiyuan Sun is a journalist at Cointelegraph focusing on technology-related news. He has several years of experience writing for major financial media outlets such as The Motley Fool, Nasdaq.com and Seeking Alpha.
Donald Trump has acted for his country and I will act in Britain’s interests, Sir Keir Starmer has said after the US president imposed 10% tariffs on UK goods.
The prime minister told business chiefs at an early morning meeting in Downing Street: “Last night the president of the United States acted for his country, and that is his mandate.
“Today, I will act in Britain’s interests with mine.”
Mr Trump announced sweeping tariffs on countries around the world, with the UK getting off relatively lightly with 10% tariffs – branded “kind reciprocal” by the president – compared with China, which will have to pay 54% tariffs and 20% for the EU.
A previously announced 25% tariff on British car imports to the US came into effect at 5am on Thursday.
Sir Keir said the government is moving “to the next stage of our plan” after negotiations failed to fend off any tariffs ahead of Wednesday’s announcement.
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He promised any decisions “will be guided only by our national interest, in the interests of our economy, in the interests of businesses around this table, in the interests of putting money in the pockets of working people”.
Image: Sir Keir Starmer hosted business leaders in Downing Street on Thursday morning. Pic: Simon Dawson/No 10 Downing Street
“Clearly, there will be an economic impact from the decisions the US has taken, both here and globally,” he told the business leaders.
“But I want to be crystal clear: we are prepared, indeed one of the great strengths of this nation is our ability to keep a cool head.”
Business Secretary Jonathan Reynolds told the Commons on Thursday the government is considering retaliatory measures and requested British businesses let him know what the tariff implications will be for them.
An “indicative list of potential products” that could be targeted was later published, with 8,364 categories covering about 27% of UK imports from the US.
Earlier, Mr Reynolds told Wilfred Frost on Sky News Breakfast his “job is not done” when it comes to negotiating a trade deal
Mr Reynolds refused to say if the tariffs might cause a global recession and said the UK has safeguards in place to ensure it is not flooded with goods that would have gone to other countries.
“We’ll take any powers we need to protect the British people and the British economy from that,” he said.
“What we have directly within our power, alongside that is, of course, the ability to negotiate a better deal in the national interest for the UK. That’s been our approach to date and we’ll continue with that.”
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1:09
Moment Trump unveils tariffs chart
UK will be template for other nations’ deals
The business secretary also suggested if the UK is successful in negotiating a deal with the US “there’ll be a template there” for other countries to “resolve some of these issues”.
He reiterated statements he and the PM have made over the past few days as he said: “America is a friend, America’s our principal ally.
“Our relationship is an incredibly strong economic one, but also a security one, a political one as well.”
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6:39
Sky’s Ed Conway examines how economies across the world are impacted by tariffs
Government ‘very slow’ to start talks
Conservative shadow home secretary Chris Philp told Sky News the government had been “very slow” to start negotiating a free trade agreement with the US, and they should have started when Mr Trump was elected in November, even though he did not get sworn in until the end of January.
He said the UK being hit by a lower tariff than the EU was “one of the benefits of Brexit”.
However, he said the 25% tariff on car exports to the US is “very, very serious” and the global impact is “bad news for our economy”.
Relief in Westminster – but concessions to Trump to come
It has been quite a rollercoaster for the government, where they went from the hope that they could avoid tariffs, that they could get that economic deal, to the realisation that was not going to happen, and then the anticipation of how hard would the UK be hit.
In Westminster tonight, there is actual relief because the UK is going to have a 10% baseline tariff – but that is the least onerous of all the tariffs we saw President Trump announce.
He held up a chart of the worst offenders, and the UK was well at the bottom of that list.
No 10 sources were telling me as President Trump was in the Rose Garden that while no tariffs are good, and it’s not what they want, the fact the UK has tariffs that are lower than others vindicates their approach.
They say it’s important because the difference between a 20% tariff and a 10% tariff is thousands of jobs.
Where to next? No 10 says it will “keep negotiating, keep cool and calm”, and reiterated Sir Keir Starmer’s desire to “negotiate a sustainable trade deal”.
“Of course want to get tariffs lowered. Tomorrow we will continue with that work,” a source added.
Another source said the 10% tariff shows that “the UK is in the friendlies club, as much as that is worth anything”.
Overnight, people will be number-crunching, trying to work out what it means for the UK. There is a 25% tariff on cars which could hit billions in UK exports, in addition to the blanket 10% tariff.
But despite this being lower than many other countries, GDP will take a hit, with forecasts being downgraded probably as we speak.
I think the government’s approach will be to not retaliate and try to speed up that economic deal in the hope that they can lower the tariffs even further.
There will be concessions. For example, the UK could lower the Digital Services Tax, which is imposed on the UK profits of tech giants. Will they loosen regulation on social media companies or agricultural products?
But for now, there is relief the UK has not been hit as hard as many others.
More than 400 pages of thousands of goods that could be affected by reciprocal tariffs against the US.
Everything from fresh domestic ducks to sea-going dredgers makes the cut; most symbolic, however, are iconic American items like jeans, motorcycles and whiskey.
Would Donald Trump stand for a levy on Levi’s? It’s not the first time this battle has played out.
At the time, the UK, then an EU member, followed suit.
But as the UK tries to carve its own path outside the bloc, vindicated by the baseline 10% tariffs imposed instead of the EU’s rate of 20%, the aim is to avoid retaliation.
The government want us to know “all options are on the table” – but that is not how they want this to play out.
“This is not a short-term tactical exercise,” the prime minister said this morning.
Despite the business secretary’s best efforts during his recent trip to Washington to try to secure a UK tariffs carveout, no deal was reached in time.
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3:54
How will tariffs hit working people?
Mr Trump wanted his big bang, board brandishing moment; carveouts for certain countries would have softened the impact of his speech.
But with 90-plus countries on the tariff billboard, how far along the queue is any UK deal?
And how much are we willing to give? Will the sensitive subject of chlorinated chicken be on the table? What of the agreement to cut taxes on big tech companies that Mr Trump wants?
Lots of questions. The day after the surreal night before is too soon to know all the answers, but this is about politics as much as it is about economics.
As the prime minister launched Labour’s local election campaign in Derbyshire today, he talked about potholes, high streets and school meals. Every question I heard was about tariffs.
Decisions made across the Atlantic are looming large. Tariffs may not directly sway many votes in the local elections, but the consequences for Rachel Reeves’s fiscal headroom and the amount of money she has to spend, or save, will have an impact before too long.
There is a certain steel about a mother who has lost a child.
It’s hard to put your finger on, but perhaps after going through hell you re-emerge made of a different material to the rest of us.
Figen Murray has been utterly relentless after her son Martyn Hett was killed in the Manchester Arena terror attack at an Ariana Grande concert in May 2017.
When she worried that politicians’ support was wavering last year, she walked 200 miles from the place Martyn died to Downing Street – and needed a hip replacement after.
And on Thursday, Martyn’s Law – rules to better train staff and safeguard venues against terrorists – was passed by royal assent, finally becoming law.
I sat down with Figen just before she went into Number 10 Downing Street to meet the prime minister, and she told me after six years of campaigning, the moment “feels surreal”.
She continued: “The Manchester attack was a wake up call. But it also made question, who are these people who do these things? Why are they doing it? What are governments doing about it? And I realised the only way I could get the answers was to educate myself – so I did a masters in counter-terrorism.
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“I’ve recognised that people were radicalised. When you were a newborn baby, you were innocent but somebody poisoned your mind.
“There are people who try to groom young people into their ideology, and I want them to recognise where these people operate, the tricks they use, the things they say and how they can recognise themselves or others in the process of being radicalised and how to get out.”
Image: Martyn Hett
She also supports the initiative to show the Netflix drama Adolescence in schools: “I think it’s absolutely important that young people see that programme and they learn more about it. It’s a good thing and I’m hoping they’re taking it further.”
There will be a debate – certainly – about the financial impact the legislation will have on venues, but the legislation has been welcomed by safety campaigners.
Emma Kay, co-founder of personal safety app WalkSafe which geo-fences events and stadiums, said: “The passing of Martyn’s Law is hugely progressive move that will keep young people safe on nights out.
“Our research has shown that 63% of women prefer to visit venues with safety initiatives in place. People want safer experiences and to know their friends and loved ones arrive home safely.”
When I sat down with Figen, I asked her how Martyn would feel today.
“Knowing Martyn, the party animal he was, he’d throw the biggest party ever,” she said.
“He was full of life and lived life not just at 100 miles an hour, but 200 miles an hour.
“You would definitely know when he came through the door, and he had an incredible ability to make everyone feel that they are the most important person in that moment in his life. And I really miss that.”
You can watch Sophy Ridge’s full interview with Figen Murray on the Politics Hub at 1900 on Sky News.