Our weekly roundup of news from East Asia curates the industry’s most important developments.
HashKey Hong Kong to commence retail trading
Crypto exchange HashKey, the first licensed virtual asset provider in Hong Kong, will open its doors to residents for retail trading on August 28.
According to local news reports, investors will only be allowed to invest up to 30% of their net worth into cryptocurrencies when using the platform. A risk control warning will be displayed if the limit is exceeded. However, Xiaoqi Weng, COO of HashKey, mentioned that the exchange “cannot validate users’ net worth,” and the limit is largely based on “self-verification” of assets.
Weng also disclosed that the exchange will assess users’ investment background based on information submitted during know-your-customer verification. “[Investment] Beginners are limited in what they can purchase,” said Weng.
At its debut, users can only trade Bitcoin (BTC) and Ether (ETH) on HashKey Hong Kong. The Hong Kong Securities and Futures Commission has not yet allowed margin trading of crypto products, nor crypto derivatives, among regulated exchanges, Weng noted.
Dark side of China’s crypto crackdown
It appears China no longer wants any private blockchain firms operating within its borders and is on the warpath to get rid of them, no matter the consequences. The move comes amidst an increase in using crypto as a means of capital flight in an economic downturn.
Local media reports suggest that, legitimate or not, blockchain projects in China have literal bounties on their heads. First, third-party tracking firms tip off the police on undercover crypto projects in the country; if the report leads to arrest and asset forfeiture, the tracking firm stands to make millions of dollars in commission, if not hundreds of millions of dollars, for large-scale projects such as Multichain.
An recent tip-off lead to a 400 billion Yuan ($55 billion) crypto money laundering bust by Chinese police. (DouYin)
Then, after arrest, crypto executives are reportedly intimidated into handing over the project’s private keys and access to servers. Police then allegedly get third-party payment processors to “dump” the coins and tokens over the counter in exchange for Chinese Yuan.
Crypto executives are then charged with operating a “multi-level marketing scheme,” “pyramid scheme,” or “money laundering.” If convicted, the charges result in the seizure of all protocol-related assets by the state.
Sources claim that a portion of the funds goes into law enforcement agency revenue. Zhengyao Liu, a senior lawyer at the Shanghai Mankuen Law Firm, wrote:
“In fact, in the past two years, the profit-seeking law enforcement in crypto-related criminal cases, especially in crypto-related MLM cases, has been the main reason people do not trust the case-handling agencies. For example, the ‘contribution’ of crypto-related criminal cases to financial fines and confiscation revenues is more than 50% higher than in previous years in the Jiangsu Province.”
The crackdown has led to the termination of several protocols this year, with little recourse for non-Chinese users with funds stuck on these platforms. Unsurprisingly, it has sparked a wave of emigration among Chinese Web3 founders, and overseas law enforcement efforts to try and recover the “stuck” funds.
The last message sent by Chinese exchange BKEX before its entire platform shut down and its staff nowhere to be found. (BKEX)
e-CNY green bonds debut
Despite the draconian crackdown on private crypto activities, government-led blockchain efforts in China are doing quite well.
On August 18, the first digital yuan central bank digital currency (e-CNY CBDC) green bond was issued with a principal amount of 100 million Chinese Yuan ($14 million), a term of two years, and a coupon rate of 2.6% per annum.
Facilitated by the Bank of Ningbo, the loans will be used to finance a 1.4 gigawatt (GW) and a 1.0 GW solar panel facility expansion project in Wuxi.
The e-CNY CBDC has been repeatedly “shilled” for much of this year as a means of stimulating domestic spending amidst a financial crisis within the country. In the City of Tianjin alone, e-CNY transaction volumes have surpassed $17.5 billion in the first half of 2023, with over 302,000 merchants accepting the CBDC as a means of payment.
FBI tracks $41M in North Korean crypto
On August 22, the U.S. Federal Bureau of Investigation announced the identification of 1,580 BTC ($41 million) stolen from various projects by North Korean hackers. The six displayed wallets include funds stolen from the $60 million Alphapo hack in June, $37 million stolen from CoinsPaid in June, and $100 million stolen from Atomic Wallet in June. The FBI wrote:
“Private sector entities should examine the blockchain data associated with these addresses and be vigilant in guarding against transactions directly with, or derived from, the addresses. The FBI will continue to expose and combat the DPRK’s use of illicit activities—including cybercrime and virtual currency theft—to generate revenue for the regime.”
The agency said it believes North Korea will attempt to cash out the stolen funds. Criminal investigations into North Korean hackers’ role in the Harmony’s Horizon Bridge and Sky Mavis’ Ronin Bridge exploits last year are still ongoing.
Chinese Bitcoin mining magnate sentenced to life in prison
Yi Xiao, a former vice chairman of the Jiangxi Provincial Political Consultative Conference Party Group, has reportedly been sentenced to life in prison by the Hangzhou Intermediate People’s Court for unrelated charges of corruption and abuse of power in a Bitcoin mining enterprise.
According to local news reports on August 22, Yi Xiao operated a 2.4 billion Chinese Yuan ($329 million) Bitcoin mining enterprise under the corporate name Jiumu Group Genesis Technology from 2017 to 2021. Despite knowing about a ban on cryptocurrencies, Xiao amassed over 160,000 Bitcoin miners with other corporate executives and, at one time, 10% of the City of Fuzhou’s entire electricity consumption.
Xiao was convicted of using his public office to secure preferential subsidies, capital, and electricity supply for Jiamu Group. The former official also used his position to fabricate statistical reports to conceal the operations’ true nature.
Starting this year, China has been cracking down harshly on crypto activities amid a spree of data theft and money laundering incidences involving digital assets. Earlier this month, a Chinese national was sentenced to nine months in prison for purchasing $13,067 worth of Tether (USDT) for an acquaintance.
Yi Xiao awaiting sentencing on charges of corruption and abuse of power (Hangzhou Intermediate People’s Court)
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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.
China’s plan to liquidate confiscated crypto through Hong Kong exchanges isn’t simply a policy — it’s to control global digital asset markets and outmaneuver the US.
The Online Safety Act is putting free speech at risk and needs significant adjustments, Elon Musk’s social network X has warned.
New rules that came into force last week require platforms such as Facebook, YouTube, TikTok and X – as well as sites hosting pornography – to bring in measures to prove that someone using them is over the age of 18.
The Online Safety Act requires sites to protect children and to remove illegal content, but critics have said that the rules have been implemented too broadly, resulting in the censorship of legal content.
X has warned the act’s laudable intentions were “at risk of being overshadowed by the breadth of its regulatory reach”.
It said: “When lawmakers approved these measures, they made a conscientious decision to increase censorship in the name of ‘online safety’.
“It is fair to ask if UK citizens were equally aware of the trade-off being made.”
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3:53
What are the new online rules?
X claims the timetable for platforms to meet mandatory measures had been unnecessarily tight – and despite complying, sites still faced threats of enforcement and fines, “encouraging over-censorship”.
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“A balanced approach is the only way to protect individual liberties, encourage innovation and safeguard children. It’s safe to say that significant changes must take place to achieve these objectives in the UK,” it said.
A UK government spokesperson said it is “demonstrably false” that the Online Safety Act compromises free speech.
“As well as legal duties to keep children safe, the very same law places clear and unequivocal duties on platforms to protect freedom of expression,” they added.
Users have complained about age checks that require personal data to be uploaded to access sites that show pornography, and 468,000 people have already signed a petition asking for the new law to be repealed.
In response to the petition, the government said it had “no plans” to reverse the Online Safety Act.
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5:23
Why do people want to repeal the Online Safety Act?
Reform UK’s leader Nigel Farage likened the new rules to “state suppression of genuine free speech” and said his party would ditch the regulations.
Technology Secretary Peter Kyle said on Tuesday that those who wanted to overturn the act were “on the side of predators” – to which Mr Farage demanded an apology, calling Mr Kyle’s comments “absolutely disgusting”.
Regulator Ofcom said on Thursday it had launched an investigation into how four companies – that collectively run 34 pornography sites – are complying with new age-check requirements.
These companies – 8579 LLC, AVS Group Ltd, Kick Online Entertainment S.A. and Trendio Ltd – run dozens of sites, and collectively have more than nine million unique monthly UK visitors, the internet watchdog said.
The regulator said it prioritised the companies based on the risk of harm posed by the services they operated and their user numbers.
It adds to the 11 investigations already in progress into 4chan, as well as an unnamed online suicide forum, seven file-sharing services, and two adult websites.
Ofcom said it expects to make further enforcement announcements in the coming months.
Already, in the true spirit of Mr Corbyn’s politics, there is talk of an open leadership contest and grassroots participation.
Some supporters of the new party – which is being temporarily called “Your Party” while a formal name is decided by members – believe that allowing a leadership contest to take place honours Mr Corbyn’s commitment to open democracy.
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5:51
Jeremy Corbyn open to ideas on new party name
They point out that under Mr Corbyn’s leadership of the Labour Party, members famously backed plans to make it easier for local constituency parties to deselect sitting MPs – a concept he strongly believed in.
His allies now say the former Labour leader, who is 76, is open to there being a leadership contest for the new party, possibly at its inaugural conference in the autumn, where names lesser known than himself can throw their hat into the ring.
“Jeremy would rather die than not have an open leadership contest,” one source familiar with the internal politics told Sky News.
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However, there have been suggestions that Ms Sultana appears to be less keen on the idea of a leadership contest, and that she is more committed to the co-leadership model than her political partner.
Those who have been opposed to the co-leadership model believe it could give Ms Sultana an unfair advantage and exclude other potential candidates from standing in the future.
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Corbyn’s new political party isn’t ‘real deal’
One source told Sky News they believed Mr Corbyn should lead the party for two years, to get it established, before others are allowed to stand as leader.
They said Ms Sultana, who became an independent MP after she was suspended from Labour for opposing the two-child benefit cap, was “highly ambitious but completely untested as leader” and “had a lot of growing into the role to do”.
“It’s not about her – it’s about taking a democratic approach, which is what we’re supposed to be doing,” they said.
“There are so many people who have done amazing things locally and they need to have a chance to emerge as leaders.
“We are not only fishing from a pool of two people.
“It needs to be an open contest. Nobody needs to be crowned.”
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1:22
Corbyn’s new party shakes the left
While Mr Corbyn and Ms Sultana undoubtedly have the biggest profiles out of would-be leaders, advocates for a grassroots approach to the leadership point to the success some independent candidates have enjoyed at a local level – for example, 24-year-old British Palestinian Leah Mohammed, who came within 528 votes of unseating Health Secretary Wes Streeting in Ilford North.
Fiona Lali of the Revolutionary Communist Party, who stood in last year’s general election for the Stratford and Bow constituency, has also been mentioned in some circles as someone with potential leadership credentials.
However, sources close to Mr Corbyn and Ms Sultana downplayed suggestions of any divide over the leadership model, pointing out that their joint statement acknowledged that members would “decide the party’s direction” at the inaugural conference in the autumn, including the model of leadership and the policies that are needed to transform society.
A spokesperson for Mr Corbyn told Sky News: “Jeremy will be working with Zarah, his independent colleagues, and people from trade unions and social movements up and down the country to make an autumn conference a reality.
“This will be the moment where people come together to launch a new democratic party that belongs to the members.”