Our weekly roundup of news from East Asia curates the industry’s most important developments.
SBF’s Chinese bribe scandal worsens
According to October 11 testimony from Caroline Ellison, co-founder of FTX-linked hedge fund Alameda Research, her colleague — disgraced FTX founder Sam Bankman-Fried — allegedly paid $150 million in bribes to Chinese government officials in 2021, higher than the $40 million disclosed initially.
Ellison said during the FTX trial that two years prior, $1 billion worth of Alameda Research’s digital assets on crypto exchanges OKX and Huobi were frozen by Chinese law enforcement as part of a money-laundering investigation. Senior FTX executives, such as chief operations officer Constance Wang and Alameda trader David Wa, were also involved in the incident. The individuals first tried to contact a Chinese lawyer to unfreeze the funds, which didn’t work.
The disgraced FTX founder will be on trial throughout October. (Wikipedia)
Then, FTX and Alameda staff allegedly created accounts on OKX and Huobi using the identification of a Thai prostitute to negotiate the return of funds. When that didn’t work out, Ellison accused Bankman-Fried of paying a $150 million bribe to unfreeze the accounts. The bribe was recorded as “the thing” in future Alameda balance sheets. According to Ellison’s testimony, the funds were immediately unfrozen following the bribe.
Presiding Judge Lewis Kaplan of the United States District Court for the Southern District of New York reminded the jurors that Bankman-Fried’s alleged bribery of Chinese officials is not within the scope of the ongoing FTX trial. Instead, a second trial relating to SBF’s bribery charges has been scheduled for March 11, 2024. The FTX trial will remain ongoing for the month of October.
Binance clarifies account freeze
Yi He, a co-founder of Binance, clarified on the Chinese social media app WeChat earlier this week that only accounts of users suspected of violating international sanctions will be frozen on the exchange.
The statement came after a wave of inquiries in response to local news reports that the exchange froze accounts of suspected Hamas militants per Israeli law enforcement’s request. Yi He explained:
“Hamas is a designated terrorist organization by the United Nations. Therefore, any organization, including banks and trading platforms, will need to cooperate on the receipt of freeze requests. This is not something Binance can decide on its own.”
The Binance executive commented: “I have no political biases, yet no trading platform can refuse such law enforcement requests. Palestine has an organized government. Hamas is a local militant group. They kill civilians; that’s the problem. Hamas is not Palestine; the freeze is targeted towards Hamas, not Palestine.”
Binance co-founder Yi He’s statement on Hamas account freezes. (WeChat)
In a follow-up post on October 11, Yi He further clarified that “Binance would not confiscate nor freeze assets of ordinary users. Rules are created by the strong; in the face of international regulations, Binance is a nobody.” She also pointed to the fact that, despite the ongoing war between Russia and Ukraine, the exchange has not frozen the accounts of ordinary Russians.
Crypto lending invalidated by second Chinese court
Crypto lending contracts in China are not protected by law because the underlying asset is illegal, a second Chinese court has ruled.
As narrated by the Nanchang People’s Court on October 10, plaintiff Mr. Ming lent 80,000 USDT to defendant Mr. Gang in April 2021 for the purpose of stablecoin trading. The loan was to be repaid within six months. Mr. Gang subsequently defaulted on the loan, leading to a civil lawsuit by Mr. Ming. Both the lawsuit and its appeal were dismissed.
In their decision, the presiding judge wrote:
“There are legal risks involved in participating in virtual currency investment and trading activities. If any legal person, unincorporated organization, or natural person invests in virtual currencies and related derivatives that violates public order and good customs, the relevant civil legal actions will be invalid, and the resulting losses shall be borne by them.”
The judge further explained that according to various legislation forming China’s crypto ban, “virtual currencies only exist in digital form, are not legal tender, and do not have legal compensation, such as Bitcoin, Ethereum, Tether, etc., and cannot be used as currency in the market. Virtual currency-related business activities are illegal financial activities that harm national financial order, financial security and social public interests, and are strictly prohibited.”
The ruling does not extend to the digital yuan central bank digital currency, which the presiding judge said “is a legal currency in digital form issued by the People’s Bank of China. It is operated by designated operating agencies and redeemed by the public. It is equivalent to banknotes and coins.”
Previously in August, a Chinese man lost $10 million worth of Bitcoin after the borrower defaulted on his Bitcoin lending agreement and a court ruled that the contract was invalid, citing similar reasons as the Nanchang People’s Court.
Chinese judge explains why the Bitcoin lending contract was invalid and therefore denied relief for breach of contract.
Huobi hacker returns all assets
According to a statement by Justin Sun, de-facto owner of cryptocurrency exchange HTX, formerly known as Huobi, a hacker has returned all of the 5,000 Ether ($8 million) stolen during a security incident last month.
“We have confirmed that the hacker has fully returned all funds, as promised, and we have also paid the hacker a white hat bonus of 250 ETH. The hacker made the right choice. We would like to express our gratitude to everyone in the industry for their help,” Sun wrote. On September 25, Huobi’s hot wallet was hacked for 5,000 ETH in an incident first detected by blockchain analytics firm Cyvers Alerts.
Sun subsequently offered a bounty and threatened legal action if the funds were not returned. During the incident, the blockchain personality also claimed that the exchange held around $3 billion in users’ assets. Last month, Huobi rebranded as HTX, raising community eyebrows due to the similarity of the name to the now-defunct crypto exchange FTX.
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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.
Reform UK has hit back at both the Archbishop of York and the government following criticism of its immigration policies.
Leader Nigel Farage announced the party’s flagship immigration plan during a flashy news conference held at an aircraft hangar in Oxford on Tuesday.
The party pledged to deport anybody who comes to the UK illegally, regardless of whether they might come to harm, and said it would pay countries with questionable human rights records – such as Afghanistan – to take people back.
It also said it would leave numerous international agreements, and revoke the Human Rights Act, in order to do this.
The policy was criticised by the Conservatives, who said Mr Farage was “copying our homework”, while parties such as the Liberal Democrats and the Greens condemned it.
More on Migrant Crossings
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Image: Archbishop Stephen Cottrell and Richard Tice MP. Pics: PA
But the plan came under fire from an altogether different angle on Saturday, when the Archbishop of York accused it of being an “isolationist, short-term kneejerk” approach, with no “long-term solutions”.
Stephen Cottrell, who is the acting head of the Church of England, told Sunday Morning With Trevor Phillips that he had “every sympathy” with those who find the issue of immigration tricky. But he said Reform UK’s plan does “nothing to address the issue of what brings people to this country”, and would in fact, make “the problem worse”.
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10:50
In full: Richard Tice on Sunday Morning With Trevor Phillips
Speaking on the same programme, Richard Tice, Reform’s deputy leader, responded to the archbishop’s criticisms, saying that “all of it is wrong”.
The MP for Boston and Skegness said he was a Christian who “enjoys” the church – but that the “role of the archbishop is not actually to interfere with international migration policies”.
Mr Tice then turned his fire on the government, accusing ministers of being “more interested in protecting the rights of people who’ve come here illegally… than looking after the rights of British citizens”.
He accused ministers of having “abandoned” their duty of “looking after the interests of British citizens”.
Mr Tice reaffirmed his party’s policy that the UK should leave the European Convention on Human Rights (ECHR), calling it a “70-year-old, out-of-date, unfit-for-purpose agreement”.
The Reform UK deputy leader also:
• Defended plans to pay the Taliban to take migrants back, comparing it to doing business deals with “people you don’t like”
• Said the Royal Navy should be deployed in the English Channel as a “deterrent”, but added: “We’re not saying sink the boats”
• Urged the government to call an early general election
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18:09
Farage ‘wants to provoke anger’
Meanwhile, Bridget Phillipson, the education secretary, told Sky News that Reform “want to provoke anger, but they don’t actually want to solve the problems that we face in front of us”.
She told Sunday Morning With Trevor Phillips the UK had a “proud tradition [of] supporting those facing persecution”.
But she added: “We will make sure that people who have no right to be in this country are removed from this country. That’s right. It’s what people expect. It’s what this government will deliver.”
Ms Phillipson also insisted there “needs to be reform of the ECHR” and said the home secretary is “looking at the article eight provisions”, which cover the right to a private and family life, to see “whether they need updating and reforming for the modern age”.
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However, she refused to say what the government would do if it is found that the ECHR is unreformable. Instead, she defended Labour’s position of staying in the governance of the convention, saying that honouring the “rule of law” is important.
She added: “Our standing in the world matters if we want to strike trade deals with countries. We need to be a country that’s taken seriously. We need to be a country that honours our obligations and honours the rule of law.”
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1:15:33
Sunday Morning With Trevor Phillips
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1:35
Asylum seekers to remain at Bell Hotel
Ms Phillipson was also drawn on the recent court ruling in favour of the Home Office, which overturned an injunction banning The Bell Hotel in Epping from housing asylum seekers.
Challenged on whether the government is prioritising the rights of asylum seekers over British citizens, she said it “is about a balance of rights”.
The cabinet minister also repeated the government’s plans to end the use of hotels to house asylum seekers by 2029.
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7:08
‘We should have overruled law’
Shadow Cabinet Office minister Alex Burghart said the Conservatives would be willing to leave the ECHR – if this route is recommended to them.
The Tories have asked a senior judge to look into the “legal intricacies” of leaving the convention, which he said is “not straightforward”. He said when the party receives that report, it will then make a decision.
Challenged on whether the Tories will leave if that is what the report recommends, he added: “If that’s what’s necessary, we will do it.”
Mr Burghart also said he believed the previous Conservative government’s biggest mistake was that “we did not go far enough on overruling human rights legislation”, which prevented it from “taking the tough action that was absolutely necessary”.
But he added the Conservatives have now “put forward very clear legislation that would solve this problem” – though he concluded Labour “isn’t going to do it” so the problem “is going to get worse”.
The Archbishop of York has told Sky News the UK should resist Reform’s “kneejerk” plan for the mass deportation of migrants, telling Nigel Farage he is not offering any “long-term solution”.
Stephen Cottrell said in an interview with Trevor Phillips he has “every sympathy” with people who are concerned about asylum seekers coming to the country illegally.
But he criticised the plan announced by Reform on Tuesday to deport 600,000 people, which would be enabled by striking deals with the Taliban and Iran, saying it will not “solve the problem”.
Mr Cottrell is currently acting head of the Church of England while a new Archbishop of Canterbury is chosen.
Image: Pic: Jacob King/PA Wire
Image: The Archbishop of York, Stephen Cottrell in 2020.
File pic: PA
Phillips asked him: “What’s your response to the people who are saying the policy should be ‘you land here, unlawfully, you get locked up and you get deported straight away. No ifs, no buts’?”
Mr Cottrell said he would tell them “you haven’t solved the problem”, adding: “You’ve just put it somewhere else and you’ve done nothing to address the issue of what brings people to this country.
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“And so if you think that’s the answer, you will discover in due course that all you have done is made the problem worse.
“Don’t misunderstand me, I have every sympathy with those who find this difficult, every sympathy – as I do with those living in poverty.
“But… we should actively resist the kind of isolationist, short term kneejerk ‘send them home’.”
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2:04
What do public make of Reform’s plans?
Image: Nigel Farage at the launch of Reform UK’s plan to deport asylum seekers. Pic: PA
Asked if that was his message to the Reform leader, he said: “Well, it is. I mean, Mr Farage is saying the things he’s saying, but he is not offering any long-term solution to the big issues which are convulsing our world, which lead to this. And, I see no other way.”
Mr Farage, the MP for Clacton, was asked at a news conference this week what he would say if Christian leaders opposed his plan.
“Whoever the Christian leaders are at any given point in time, I think over the last decades, quite a few of them have been rather out of touch, perhaps with their own flock,” he said.
“We believe that what we’re offering is right and proper, and we believe for a political party that was founded around the slogan of family, community, country that we are doing right by all of those things, with these plans we put forward today.”
Sky News has approached Mr Farage for comment.
Farage won’t be greeting this as good news of the gospel – nor will govt ministers
When Tony Blair’s spin doctor Alastair Campbell told journalists that “We don’t do God”, many took it as a statement of ideology.
In fact it was the caution of a canny operator who knows that the most dangerous opponent in politics is a religious leader licensed to challenge your very morality.
Stephen Cottrell, the Archbishop of York, currently the effective head of the worldwide Anglican communion, could not have been clearer in his denunciation of what he calls the Reform party’s “isolationist, short term, kneejerk ‘send them home'” approach to asylum and immigration.
I sense that having ruled himself out of the race for next Archbishop of Canterbury, Reverend Cottrell feels free to preach a liberal doctrine.
Unusually, in our interview he pinpoints a political leader as, in effect, failing to demonstrate Christian charity.
Nigel Farage, who describes himself as a practising Christian, won’t be greeting this as the good news of the gospel.
But government ministers will also be feeling nervous.
Battered for allowing record numbers of cross- Channel migrants, and facing legal battles on asylum hotels that may go all the way to the Supreme Court, Labour has tried to head off the Reform challenge with tougher language on border control.
The last thing the prime minister needs right now is to make an enemy of the Almighty – or at least of his representatives on Earth.