Another $18.9M Hong Kong exchange scandal, HTX ‘sorry’ airdrop: Asia Express
Our weekly roundup of news from East Asia curates the industry’s most important developments.
Yet another crypto scandal in Hong Kong
Scammers posing as investment experts allegedly enticed 145 victims to tip $18.9 million into the unlicensed Hong Kong crypto exchange Hounax.
According to reports earlier this week, the police said investors were allegedly promised up to 40% return per annum with “no risk” in its advertisements. After users deposited their funds, they were unable to withdraw them. On November 1, the Securities & Futures Exchange (SFC) of Hong Kong listed Hounax on its billboard of suspicious crypto exchanges but clarified that because Hounax was unlicensed at the time of incident, it was not subjected to the regulatory’s enforcement actions.
This was the second scandal involving a crypto exchange in Hong Kong in recent months. In September, another unlicensed exchange JPEX collapsed after allegations of a Ponzi scheme unsurfaced, leading to 66 arrests and an estimated $205 million in investors’ losses.
Despite the scandals, Hong Kong regulators appear to remain steadfast in their commitment to transforming the city into a major Web3 hub. On November 27, SFC CEO Julia Leung, explained that “even if the grace period ends tomorrow, fraud will still occur, so there is no intention to modify the grace period and other measures for the time being.”
Under current regulations, a grace period for crypto exchanges to operate without registration will end in June 2024. On November 30, the SFC stated that it seeks to legitimize initial coin offerings in the city to create more revenue for the national budget.
In other Hong Kong crypto news, the financial institutions, Interactive Brokers and Victory Securities, this week announced they had secured crypto licenses, with the former partnering with licensed crypto exchange OSL to immediately provide Bitcoin (BTC) and Ethereum (ETH) trading services to its Hong Kong clients.
And on November 29, Darryl Chan, deputy chief executive of the Hong Kong Monetary Authority, announced a multinational effort to create a cross-chain bridge for China’s digital yuan central bank digital currency (e-CNY CBDC). Dubbed “mBridge,” the protocol seeks to reduce transaction fees and improve speeds for cross-border uses of the e-CNY CBDC. The first pilot tests will begin in Mainland China and Hong Kong.
Read also
Foreign banks join e-CNY pilot testing
Standard Chartered, HSBC, Hang Seng Bank, and Taiwan-based Fubon Bank have begun testing of the digital yuan in cross-border transactions.
According to local news reports on November 28, the four foreign banks will also integrate e-CNY transfer services for their clients and enable them to deposit and withdraw e-CNY. Personal banking accounts will also support the official e-CNY app and self-custody wallet. Yuesheng Song, president and vice-chairman of Hang Seng China, commented:
“The central bank’s launch of the digital RMB, a legal currency in digital form, is an important step for China to explore the development of digital currency and promote the internationalization of the RMB. Hang Seng China follows the national financial development policy advocacy and actively supports the application and development of the central bank’s digital currency.”
In the first three quarters of 2023, the use of the digital yuan in transactions was up 35% year-on-year, reaching $1.39 trillion, China Daily reported. On November 29, the first-ever e-CNY student loans were issued in the province of Suzhou with $26,230 worth of loans being issued directly into the digital wallets of 13 recipients.
HTX back to normal
HTX exchange (formerly Huobi Global) has reopened deposits and withdrawals after a devastating hot wallet hack that drained the exchange of $30 million on November 22.
According to the November 26 announcement, the exchange has since resumed deposits and withdrawals on the Bitcoin, Ethereum, and Tron networks.
“Huobi HTX once again promises to fully compensate for the losses caused by this attack and 100% guarantee the safety of user funds. The amount of funds lost by Huobi HTX this time accounts for a very small amount of the total funds of the platform,” the exchange said.
The firm has also announced that a special airdrop will take place in December designed to reward its “loyal users.” Airdrop tokens will reportedly come from an “upcoming high-quality projects,” and the amount to be received will be determined by a users’ average net assets on the HTX exchange denominated in Tether (USDT).
Immediately after the incident, Justin Sun, founder of the Tron ecosystem and de-facto owner of the HTX exchange, commented “we will cover the loss and all assets are SAFE.” Despite assurances, however, this was the fourth exploit involving the HTX ecosystem within the past two months. Around the same time as the HTX exploit, the HTX Ecosystem Chain (HECO) bridge was hacked for $87 million.
On November 10, Poloniex, an exchange acquired by Sun in 2018, was hacked for $100 million due to allegedly compromised private keys. The exchange resumed withdrawals on November 30. On September 25, HTX was drained of $8 million in a security incident. The exchange has since clawed back $8 million in stolen funds and issued a 250 Ether bounty to the hacker.
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Politics
Specialist teams and online investigators deployed across England and Wales to tackle ‘national emergency’ of violence against women and girls
Specialist investigation teams for rape and sexual offences are to be created across England and Wales as the home secretary declares violence against women and girls a “national emergency”.
Shabana Mahmood said the dedicated units will be in place across every force by 2029 as part of Labour’s violence against women and girls (VAWG) strategy due to be launched later this week.
The use of Domestic Abuse Protection Orders (DAPOs), which had been trialled in several areas, will also be rolled out across England and Wales. They are designed to target abusers by imposing curfews, electronic tags and exclusion zones.
The orders cover all forms of domestic abuse, including economic abuse, coercive and controlling behaviour, stalking and ‘honour’-based abuse. Breaching the terms can carry a prison term of up to five years.
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Govt ‘thinking again’ on abuse strategy
Nearly £2m will also be spent funding a network of officers to target offenders operating within the online space.
Teams will use covert and intelligence techniques to tackle violence against women and girls via apps and websites.
A similar undercover network funded by the Home Office to examine child sexual abuse has arrested over 1,700 perpetrators.
Abuse is ‘national emergency’
Ms Mahmood said in a statement: “This government has declared violence against women and girls a national emergency.
“For too long, these crimes have been considered a fact of life. That’s not good enough. We will halve it in a decade.
“Today, we announce a range of measures to bear down on abusers, stopping them in their tracks. Rapists, sex offenders and abusers will have nowhere to hide.”
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Angiolini Inquiry: Recommendations are ‘not difficult’
The target to halve violence against women and girls in a decade is a Labour manifesto pledge.
The government said the measures build on existing policy, including facial recognition technology to identify offenders, improving protections for stalking victims, making strangulation a criminal offence and establishing domestic abuse specialists in 999 control rooms.
Read more from Sky News:
Demands for violence and abuse reforms
Women still feel unsafe on streets
Minister ‘clarifies’ violence strategy
Labour has ‘failed women’
But the Conservatives said Labour had “failed women” and “broken its promises” by delaying the publication of the violence against women and girls strategy.
Shadow home secretary Chris Philp said that Labour “shrinks from uncomfortable truths, voting against tougher sentences and presiding over falling sex-offender convictions. At every turn, Labour has failed women”.
Home Secretary Shabana Mahmood will be on Sunday Morning with Trevor Phillips on Sky News this morning from 8.30am.
The United States Securities and Exchange Commission (SEC) published a crypto wallet and custody guide investor bulletin on Friday, outlining best practices and common risks of different forms of crypto storage for the investing public.
The SEC’s bulletin lists the benefits and risks of different methods of crypto custody, including self-custody versus allowing a third-party to hold digital assets on behalf of the investor.
If investors choose third-party custody, they should understand the custodian’s policies, including whether it “rehypothecates” the assets held in custody by lending them out or if the service provider is commingling client assets in a single pool instead of holding the crypto in segregated customer accounts.
Crypto wallet types were also outlined in the SEC guide, which broke down the pros and cons of hot wallets, which are connected to the internet, and offline storage in cold wallets.
Hot wallets carry the risk of hacking and other cybersecurity threats, according to the SEC, while cold wallets carry the risk of permanent loss if the offline storage fails, a storage device is stolen, or the private keys are compromised.
The SEC’s crypto custody guide highlights the sweeping regulatory change at the agency, which was hostile to digital assets and the crypto industry under former SEC Chairman Gary Gensler’s leadership.
Related: SEC sends warning letters to ETF issuers targeting untamed leverage
The crypto community celebrates the SEC guide as a transformational change in the agency
“The same agency that spent years trying to kill the industry is now teaching people how to use it,” Truth For the Commoner (TFTC) said in response to the SEC’s crypto custody guide.
The SEC is providing “huge value” to crypto investors by educating prospective crypto holders about custody and best practices, according to Jake Claver, the CEO of Digital Ascension Group, a company that provides services to family offices.
SEC regulators published the guide one day after SEC Chair Paul Atkins said that the legacy financial system is moving onchain.
On Thursday, the SEC gave the green light to the Depository Trust and Clearing Corporation (DTCC), a clearing and settlement company, to begin tokenizing financial assets, including equities, exchange-traded funds (ETFs) and government debt securities.
Magazine: Unstablecoins: Depegging, bank runs and other risks loom
Greens leader Zack Polanski has rejected claims his party would push for open borders on immigration, telling Sky News it is “not a pragmatic” solution for a world in “turmoil”.
Mr Polanski distanced himself from his party’s “long-range vision” for open borders, saying it was not in his party’s manifesto and was an “attack line used by opponents” to question his credibility.
It came as Mr Polanski, who has overseen a spike in support in the polls to double figures, refused to apologise over controversial comments he made about care workers on BBC Question Time that were criticised across the political spectrum.
Mr Polanski was speaking to Sky News earlier this week while in Calais, where he joined volunteers and charities to witness how French police handle the arrival of migrants in the town that is used as a departure point for those wanting to make the journey to the UK.
He told Sky News he had made the journey to the French town – once home to the “Jungle” refugee camp before it was demolished in 2016 – to tackle “misinformation” about migration and to make the case for a “compassionate, fair and managed response” to the small boats crisis.
He said that “no manifesto ever said anything about open borders” and that the Greens had never stood at a general election advocating for them.
“Clearly when the world is in political turmoil and we have deep inequality, that is not a situation we can move to right now,” he said.
“That would also involve massive international agreements and cooperation. That clearly is not a pragmatic conversation to have right now. And very often the government try to push that attack line to make us look not pragmatic.”
The party’s manifesto last year did not mention open borders, but it did call for an end to the “hostile environment”, more safe and legal routes and for the Home Office to be abolished and replaced with a department of migration.
Asked why the policy of minimal restrictions on migration had been attributed to his party, Mr Polanski said open borders was part of a “long-range vision of what society could look like if there was a Green government and if we’d had a long time to fix some of the systemic problems”.
‘We should recognise the contribution migrants make’
Mr Polanski, who was elected Green Party leader in September and has been compared to Nigel Farage over his populist economic policies, said his position was one of a “fair and managed” migration system – although he did not specify whether that included a cap on numbers.
He acknowledged that there needed to be a “separate conversation” about economic migration but that he did not believe any person who boarded a small boat was in a “good situation”.
While Mr Polanski stressed that he believed asylum seekers should be able to work in Britain and pay taxes, he also said he believed in the need to train British workers in sectors such as care, where one in five are foreign nationals.
Asked what his proposals for a fair and managed migration system looked like, and whether he supported a cap on numbers, Mr Polanski said: “We have 100,000 vacancies in the National Health Service. One in five care workers in the care sector are foreign nationals.
Zack Polanski speaks to Sky News from a warehouse in Calais where charities and organisations provide migrants with essentials.
“Now, of course, that is both British workers and we should be training British workers, but we should recognise the contribution that migrants and people who come over here make.”
I’m not going to apologise’
Mr Polanski also responded to the criticism he attracted over his comments about care workers on Question Time last week, where he told the audience: “I don’t know about you, but I don’t particularly want to wipe someone’s bum” – before adding: “I’m very grateful for the people who do this work.”
His comments have been criticised by a number of Labour MPs, including Wes Streeting, the health secretary, who said: “Social care isn’t just ‘wiping someone’s bum’. It is a hard, rewarding, skilled professional job.
“This is immigration as exploitation.”
Read more:
The Greens leader who wants to be the Farage of the left
Will Farage racism allegations deter voters?
Asked whether he could understand why some care workers might feel he had talked down to them, the Greens leader replied: “I care deeply about care workers. When I made those comments, it’s important to give a full context. I said ‘I’m very grateful to people who do this important work’ and absolutely repeat that it’s vital work.”
“Of course, it is not part of the whole job, and I never pretended it was part of the whole job.”
Mr Polanski said he “totally” rejected the suggestion that he had denigrated the role of care workers in the eyes of the public and said his remarks were made in the context of a “hostile Question Time” where he had “three right-wing panellists shouting at me”.
Pressed on whether he wanted to apologise, he replied: “I’m not going to apologise for being really clear that I’m really grateful to the people who do this really vital work. And yes, we should be paying them properly, too.”
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