NHN Corporation, a South Korean entertainment conglomerate with over US$2.4 billion in total assets, announced Friday that it has partnered with U.S.-based Mysten Labs, the developers of the Sui blockchain, to launch an on-chain game scheduled for 2024. The partnership arrives despite a ban in South Korea against all blockchain-related games.

See related article: It’s time for Web3 gaming to up its own game

Fast facts

“What excites me about building with NHN is what we’re beginning to refer to as ‘stickiness’ for users,” Evan Cheng, CEO and co-founder of Mysten Labs said in an emailed press release. “It’s a code Web3, as a whole, has not managed to crack, with daily active users on the most popular chains barely topping 300,000. At Mysten Labs, our mission is to bring the benefits of Web3 to the masses, by the billions.”

NHN Corporation, which started as a game company in 1999, says it has over 37 million registered users on its mobile game titles such as Friends Pop and social casino game Hangame Poker.

Sui is a layer-1 blockchain network built by Mysten Labs, a Palo Alto-based company founded by engineers who previously worked on Meta’s Diem stablecoin project. Mysten Labs said in Friday’s press release the Sui blockchain is well suited to supporting games given its low fees, fast transactions and high degree of scalability. 

South Korea has the fourth largest gaming market in the world. It totaled nearly 21 trillion Korean won (US$15.72 billion) in annual revenue in 2021, according to a report from the Korea Creative Content Agency from January.

Games that involve cryptocurrencies or NFTs in South Korea are banned. The law is enforced by the Game Rating and Administration Committee and prohibits firms from promoting speculative behaviors to players via cashable rewards. All video games must acquire an age rating from the game rating committee for South Korean release. 

South Korean president Yoon Suk-yeol promised to abolish the play-to-earn (P2E) ban in his election campaign last year. But he is yet to follow through on the promise. South Korean P2E game makers have released blockchain-based games abroad, hoping that the local ban will be lifted. 

Mysten Labs and NHN did not respond to Forkast’s email request for additional comments sent Monday morning in Asia.

See related article: Sega says still exploring Web3 game initiatives despite reports of withdrawal

NHN Corporation, a South Korean entertainment conglomerate with over US$2.4 billion in total assets, announced Friday that it has partnered with U.S.-based Mysten Labs, the developers of the Sui blockchain, to launch an on-chain game scheduled for 2024. The partnership arrives despite a ban in South Korea against all blockchain-related games.

See related article: It’s time for Web3 gaming to up its own game

Fast facts

“What excites me about building with NHN is what we’re beginning to refer to as ‘stickiness’ for users,” Evan Cheng, CEO and co-founder of Mysten Labs said in an emailed press release. “It’s a code Web3, as a whole, has not managed to crack, with daily active users on the most popular chains barely topping 300,000. At Mysten Labs, our mission is to bring the benefits of Web3 to the masses, by the billions.”

NHN Corporation, which started as a game company in 1999, says it has over 37 million registered users on its mobile game titles such as Friends Pop and social casino game Hangame Poker.

Sui is a layer-1 blockchain network built by Mysten Labs, a Palo Alto-based company founded by engineers who previously worked on Meta’s Diem stablecoin project. Mysten Labs said in Friday’s press release the Sui blockchain is well suited to supporting games given its low fees, fast transactions and high degree of scalability. 

South Korea has the fourth largest gaming market in the world. It totaled nearly 21 trillion Korean won (US$15.72 billion) in annual revenue in 2021, according to a report from the Korea Creative Content Agency from January.

Games that involve cryptocurrencies or NFTs in South Korea are banned. The law is enforced by the Game Rating and Administration Committee and prohibits firms from promoting speculative behaviors to players via cashable rewards. All video games must acquire an age rating from the game rating committee for South Korean release. 

South Korean president Yoon Suk-yeol promised to abolish the play-to-earn (P2E) ban in his election campaign last year. But he is yet to follow through on the promise. South Korean P2E game makers have released blockchain-based games abroad, hoping that the local ban will be lifted. 

Mysten Labs and NHN did not respond to Forkast’s email request for additional comments sent Monday morning in Asia.

See related article: Sega says still exploring Web3 game initiatives despite reports of withdrawal

South Korea’s top internet company Kakao and leading game developer Com2uS are sizing down their metaverse teams as the virtual world platforms recorded large losses in the first half of 2023, local news agency Newsis reported.

See related article: South Koreans hold nearly US$100 billion in crypto overseas

Fast facts

Com2uS, a major mobile game developer that recorded US$536 million in revenue last year, recently downsized its staff in its metaverse division, according to Newsis. The details regarding the staff cutback have not been revealed.

The company’s metaverse platform, Com2Verse, officially launched on Aug. 1 this year. However, the business arm behind the metaverse platform recorded an operating loss of about US$6.2 million in the first half of this year.

Colorverse, another South Korea-based metaverse company, conducted a round of layoffs earlier this year without disclosing the details to the public. Colorverse, owned by Kakao’s gaming subsidiary Kakao Games and its affiliate Neptune, recorded US$8.6 million in losses last year. 

In July, CyTown, a metaverse revamp of once hugely popular local social media service Cyworld, shut down after a year of service. The virtual platform failed to attract users, recording only around 10,000 downloads on the Google Play app store. 

A survey conducted by the Korea Information Society Development Institute released in May revealed that only 4.2% of South Korean citizens regularly use metaverse services. The survey’s broad interpretation of what constitutes a “metaverse” platform included popular games Minecraft, Roblox and Animal Crossing.

Metaverse pioneer Meta, formerly Facebook, saw its metaverse division Reality Labs post US$13.7 billion in losses. 

In February, ten Japanese companies including Fujitsu, Mitsubishi and Sumitomo Mitsui, agreed to establish the Japan Metaverse Economic Zone, a working group to boost local metaverse infrastructure. The group has made no subsequent announcements relating to the project.

Meanwhile, China’s Ministry of Industry and Information Technology said Monday that it will look to establish regulatory standards for the metaverse in order to become a world leader in the sector.

Kakao and Com2uS have yet to respond to Forkast’s email request for comments sent Friday.

See related article: Crypto and Formula One’s honeymoon is over, can Web3 save a rocky marriage?

South Korean investors and corporations hold over 131 trillion Korean won (US$97.9 billion) worth of cryptocurrencies in overseas accounts, South Korea’s National Tax Service announced Wednesday. The figure is 70% of the total reported financial assets held by South Koreans overseas.

See related article: Korea Blockchain Week: diverging crypto paths for the US and Asia

Fast facts

In an annual assessment of monthly tax filings carried out from January to June this year, South Korea’s National Tax Service found 1,432 retail investors and corporations hold the near US$100 billion of overseas crypto assets.

South Korean residents and corporations with over 500 million won (US$372,939) worth of overseas assets are required to report those assets to tax authorities. 2023 marks the first year South Korea’s tax authorities included crypto in its annual assessment.

5,419 retail investors and corporations reported a total of 186.4 trillion won (US$139 billion) in overseas financial assets of all kinds. That figure is a 191.3% increase on last year.

“This year saw a record number of filers and amounts because foreign virtual asset accounts were included for the first time,” the National Tax Service wrote in a press release. 

The press release said that authorities will use cross-border transactions data to identify anyone who avoids reporting their overseas asset holdings. It will also strictly enforce penalties including criminal charges for those found guilty of doing so, it said.

In 2021, South Korea effectively banned foreign cryptocurrency exchanges from operating in the country. However, South Korean residents may still trade cryptocurrencies via overseas exchanges.

See related article: South Korea’s Hana bank partners with BitGo on digital asset services

The U.S. Securities and Exchange Commission will expand its regulatory enforcement beyond Coinbase and Binance.US onto other cryptocurrency exchanges, intermediaries and decentralized finance (DeFi) entities, the agency’s head of crypto assets and cyber unit David Hirsch said Tuesday at a forum in Chicago.

See related article: U.S. SEC denied immediate access to Binance.US software

Fast facts

The SEC is currently investigating other companies that have allegedly conducted similar breaches as Coinbase and Binance.US, Hirsch said at the Securities Enforcement Forum Central in Chicago.

“We’re going to continue to bring those charges,” said Hirsch, adding that intermediaries such as brokers, dealers and clearing agencies that are not fulfilling their obligations will not escape the regulator’s reach.

The SEC sued Coinbase and Binance.US in June, based on accusations that the two major crypto platforms were offering unregistered securities, which deprived investors of protection against conflicts of interest and other risks. 

The agency’s longstanding legal battle with Ripple Labs is also centered around the SEC’s claim that sales of XRP constituted the unregistered offering of investment contracts.

Hirsch further added that adding a “DeFi” label to an operation will not help circumvent the SEC’s enforcement. 

In the agency’s enforcement action against the Stoner Cats non-fungible token (NFT) project, SEC enforcement director Gurbir Grewal said the “economic reality of the offering” determines an offering as a financial security, not its labels.

See related article: SEC fines Stoner Cats for selling unregistered securities as NFTs

A U.S. federal judge has denied the U.S. Securities and Exchange Commission (SEC) immediate access to Binance.US’ software, in response to the regulator’s motion demanding more detailed information from Binance and greater availability of its executives for depositions.

See related article: JPEX crypto exchange shuts trading amid Hong Kong regulator probe

Fast facts

On Monday, Federal Magistrate Judge Zia Faruqui said he was not “inclined to allow the inspection at this time.” He asked that the SEC come up with more specific requests, according to a Bloomberg report. 

Binance, the world’s largest crypto exchange, has been dealing with growing regulatory challenges in the U.S. this year. 

In June, the crypto exchange was sued by the SEC for allegedly breaching securities mandate.

The exchange earlier this month laid off one-third of its staff, or more than 100 employees. Brian Shroder, the chief executive of Binance U.S., also left the company.

Binance’s global head of product Mayur Kamat has also resigned from the company, according to Reuters.

See related article: India’s G20 presidency has failed to advance global crypto governance, ex-finance secretary says

Citigroup, the third largest banking institution in the U.S., announced Monday the launch of Citi Token Services, a blockchain-based cross-border payments solution for institutional clients.

See related article: Standard Chartered’s crypto custody arm Zodia launches in Singapore

Fast facts

The service will use tokenized deposits and smart contracts to provide real-time cross-border settlements and liquidity for institutional clients anywhere in the world and around the clock, Citi said in a press release. 

“[The news] is another sign that the big financial institutions continue to embrace blockchain technology,” Singapore-based digital asset services platform Matrixport’s head of research and strategy Markus Thielen said in an email statement. “Undoubtedly, blockchain is seen as a technological improvement to the current financial system.”

Citi Token Services was tested in a piloting program with logistics company Maersk. 

The private blockchain technology used for Citi Token Services is owned and managed by Citi itself. The company explained that customers will not need to host a blockchain node to use the service.

JPMorgan Chase & Co. is also exploring a blockchain-based deposit token for faster cross-border payments and settlements, according to a Bloomberg report earlier in September.

Citigroup has over 13,000 institutional clients including 90% of global Fortune 500 companies, according to the company website. Overall, it has over 100 million customers across nearly 160 countries.

See related article: Coinbase and Wall Street: The merging worlds of TradFi and crypto

Dubai-based cryptocurrency exchange JPEX is shutting trading on its platform amid a probe by the Hong Kong’s Securities and Futures Commission that said the firm was operating as an unlicensed entity, according to media reports. 

See related article: Hong Kong Web3 industry forms new associations to push crypto hub ambition

Fast facts

JPEX attributed blame to its “third-party market makers” for freezing funds and restricting liquidity, after news of investigations by Hong Kong authorities.

Meanwhile, Hong Kong police received at least 83 complaints about the exchange, according to a South China Morning Post report Monday.

Hong Kong police arrested influencer Joseph Lam Chok Monday in connection with cryptocurrency trading platform JPEX, according to media reports. 

Hong Kong has been welcoming investments from digital assets companies and has set out new rules for the industry as the city aims to become a global hub for digital assets. 

It allows licensed cryptocurrency trading platforms to offer services to retail investors while implementing measures to protect individual traders.

See related article: Hong Kong? Singapore? Tokyo? Seoul? Dubai? The race is on for the Web3 hub of Asia | Part 1

The U.S. House Financial Services Committee announced last Friday that it will discuss a new bill to prevent the issuance of a central bank digital currency (CBDC).

See related article: Nepal central bank plans CBDC within two years

Fast facts

Committee Chairman Patrick McHenry announced that the markup, a session where committee members examine the proposal in detail and possibly offer amendments, of the Digital Dollar Pilot Prevention Act will take place on Sept. 20.

#NEW: Chairman @PatrickMcHenry announces a markup of legislation to strengthen American national security and prevent the issuance of a central bank digital currency.📖 Read more 🔗https://t.co/oy3oASJYkA

— Financial Services GOP (@FinancialCmte) September 16, 2023

The bill was first introduced by Alex Mooney, a  Republican Party representative, on May 26. 

“This bill would prohibit the Federal Reserve from establishing, carrying out, or approving a program intended to test the practicability of issuing a CBDC,” Mooney’s announcement said. “CBDCs pose major privacy and government surveillance concerns.”

He also claimed that China is utilizing its CBDC pilot program to monitor citizens and curtail banking access for government dissenters.

In July, the Federal Reserve said it had not decided to issue a CBDC and added that legal authorization remains a prerequisite for such developments. 

The Fed’s statement came as it launched FedNow, a real-time interbank payment settlement service for individuals and businesses, on July 20. According to the U.S. central bank, FedNow is unrelated to digital currencies.

See related article: Asia’s richest man bets on blockchain, CBDC

A U.S. bankruptcy court in Delaware approved failed cryptocurrency exchange FTX’s motion to sell its crypto assets at a court hearing on Wednesday. The company, led by restructuring expert John J. Ray III, is looking to repay its creditors while considering a possible revamp of the trading platform.

See related article: Why FTX deserves a second chance

Fast facts

Delaware bankruptcy court Judge John Dorsey allowed the bankrupt exchange to liquidate up to US$100 million in cryptocurrencies per week, according to court documents. The limit may rise to US$200 million upon approval from two committees representing FTX customers.

FTX also plans to hedge and stake its crypto through an investment advisor. The company expects these methods to mitigate price volatility risks and earn passive interest, according to the approved proposal. 

The company has nominated Galaxy Asset Management — a digital asset company led by ex-investment banker Mike Novogratz — to act as an advisor in the process.

The bankrupt crypto exchange owns US$3.4 billion in crypto assets, according to its court filing. It holds about US$1.16 billion in Solana, US$560 million in Bitcoin and US$192 million in Ether. Other crypto holdings include stablecoin USDT and XRP. 

FTX and sister hedge fund Alameda Research filed for Chapter 11 bankruptcy protection on Nov. 11, which was followed by allegations of misappropriation of billions of dollars in client funds and other wrongdoings.

FTX is also trying to claw back millions of dollars it paid celebrity endorsers and sports teams prior to its bankruptcy, including retired basketball player Shaquille O’Neal, tennis professional Naomi Osaka, and the National Basketball Association team Miami Heat.

Meanwhile, Sam Bankman-Fried, FTX founder and its former chief executive officer, was jailed Aug. 11 for witness tampering, following his arrest in the Bahamas in December 2022. He maintains his innocence and has pleaded not guilty to all 13 charges brought against him including multibillion-dollar wire and securities fraud.

See related article: Bankrupt FTX recovers US$7.3 billion in assets, considers resurrection of operations

Japan-based Astar Network announced Wednesday that it is launching its zkEVM solution powered by Polygon’s Chain Developer Kit (CDK) to improve the interoperability of its network with Ethereum Virtual Machine (EVM) chains.

See related article: How Japan is illuminating the path of blockchain’s future

Fast facts

Astar’s zero-knowledge Ethereum Virtual Machine, or zkEVM in short, is a layer-2 scaling solution for Ethereum that offers a more scalable software computing environment for Ethereum-based applications.

Astar said that it expects the zkEVM to be the “entry point” for international entertainment and gaming projects into Japan.

A zero-knowledge protocol in blockchain confirms the validity of an on-chain transaction without needing additional interaction or trust between participants. Its benefits include lower gas fees, faster transactions and higher privacy.

Polygon CDK is an open-source collection of codes that supports developers in launching zero-knowledge layer-2 chains for Ethereum, according to Polygon. Chains built on CDK are interoperable with other CDK chains.  

“By driving more enterprise adoption through zkEVM, we would also work together with the Japanese Government to enhance Web3 as the national strategy,” Astar founder Sota Watanabe said in a press release.

Japan’s Prime Minister Fumio Kishida, who assumed his position in 2021, voiced his support for digital finance and Web3 adoption in Japan to reinvigorate the economy in what he has called “new capitalism.” Web3 is often refered to as the latest wave of internet innovations based on blockchain, such as cryptocurrencies, non-fungible tokens and metaverses.

See related article: Sony Network Communications to invest in Japanese Web3 developer Startale Labs

Hong Kong-based cryptocurrency exchange CoinEx Global suffered a security breach on Tuesday, resulting in an estimated loss of US$43 million in cryptocurrencies.

See related article: Crypto in the time of cockroaches

Fast facts

The exchange is still assessing the full extent of lost crypto assets in the exploit but said on Wednesday morning that it identified a second set of suspicious wallet addresses linked to the breach, which siphoned off tokens such as Ether, XRP, Solana, Kadena and Dagger.

#CoinExResponseUpdate – We've identified the 2nd series of suspicious wallet addresses linked to the hack:$ETH:0x2118e4432d668aCFa347ddBA0efCcc6BB04DB2970x1A61Df134d766f1e240FBFAEe79bBeCC04195f620x40cBe7580168d52b7FEC884120B31115c3F7E37E$XRP:…

— CoinEx Global (@coinexcom) September 13, 2023

Before CoinEx’s latest update, Blockchain security firm PeckShield said on X (formerly Twitter) on Wednesday estimated the exchange’s loss to be around US$43 million. The first set of addresses linked to the hack identified by CoinEx stole Ether, Bitcoin and Tron from the platform.

CoinEx said a notice shared on its X account on Tuesday following the attack that all user assets are safe and secure. The exchange has suspended deposit and withdrawal services and assured that affected users will receive full compensation for any losses caused by the hack.

Hackers stole more than US$3.8 billion in cryptocurrencies last year, according to blockchain forensics firm Chainalysis. Out of that amount, North Korea-backed cyber actors hacked US$1.7 billion.

See related article: Crypto hackers stole record US$3.8 bln in 2022, mostly from DeFi and cross-chain bridges: Chainalysis

The U.S. affiliate of the world’s largest cryptocurrency exchange Binance has laid off one-third of its staff, or more than 100 employees. Brian Shroder, the chief executive officer, has also departed the company, a Binance.US spokesperson told Forkast on Wednesday.

See related article: Mastercard and Binance end crypto card partnership, services shut down in Latin America, Middle East 

Fast facts

This downsizing effort will provide Binance.US “more than seven years of financial runway,” the company spokesperson told Forkast in an email statement. 

“The SEC’s aggressive attempts to cripple our industry and the resulting impacts on our business have real world consequences for American jobs and innovation, and this is an unfortunate example of that,” the spokesperson added.

The crypto exchange has been dealing with growing regulatory pressures in the U.S. this year. In June, the company was sued by the Securities and Exchange Commission (SEC) for allegedly violating securities regulations.

Norman Reed, the company’s chief legal officer, assumed Shroder’s position on an interim basis, the Binance.US spokesperson confirmed with Forkast.

Binance, the parent company, also faces regulatory scrutiny from the U.S. The Commodity Futures Trading Commission (CFTC) filed a civil suit against the exchange and founder Changpeng Zhao in March for operating an “intentionally opaque” business to take advantage of “regulatory arbitrage.”

The U.S. Department of Justice is also reported to be closely monitoring Binance with the possibility of pursuing fraud charges against the trading platform. 

Last week, Binance’s global head of product Mayur Kamat resigned from the company, according to Reuters.

See related article: Binance denies Russia sanctions violation reported by WSJ

Zodia Custody, the cryptocurrency custodian owned by Standard Chartered, announced Tuesday that it is launching its services in Singapore for financial institutions, CNBC reported. Standard Chartered is a U.K.-based multinational banking conglomerate with total assets of US$838.7 billion as of July 2023.

See related article: Will Singapore steady the stablecoin ship?

Fast facts

Zodia reportedly said it is the first bank-owned entity to provide crypto custody services for institutional clients in Singapore.

Singapore is moving to the “next level of maturity” in regulating crypto and developing central bank digital currencies (CBDC), Zodia Chief Executive Officer Julian Sawyer told CNBC.

Last Wednesday, Zodia said it received an in-principle approval from Abu Dhabi to pursue regulated over-the-counter crypto broker-dealer activities in the United Arab Emirates capital.

Earlier in February, Zodia announced a joint venture with financial services firm SBI Holdings for custody services in Japan.

Standard Chartered launched Zodia in July 2021 with Chicago-based financial services firm Northern Trust.

Several major cryptocurrency firms with a global reach have recently expanded their presence in Singapore. Gemini, the cryptocurrency exchange founded by the Winklevoss brothers, announced in June that it’s growing its headcount in the city-state to operate as an expansion hub in the Asia-Pacific.

See related article: Singapore to require crypto firms to hold customer assets in a trust; restricts lending, staking by retail users

Oasys, a blockchain-based game development platform, will team up with non-fungible token (NFT) marketplace αU market and cryptocurrency wallet αU Wallet – a crypto wallet by KDDI, one of Japan’s top three telecom companies – for users to trade NFTs on the αU market.

See related article: Weekly Market Wrap: ETF developments bolsters Bitcoin above US$26,000

Fast facts

This will enable users to buy and sell NFTs on Oasys in the αU market, manage the assets directly in the αU wallet, and transfer and deposit Oasys (OAS) tokens in the wallet.

The collaboration will also open up Oasys-native games and decentralized applications to KDDI’s large user base, potentially bringing a new influx of gamers to blockchain games on the network.

The announcement is part of Oasys’ wider Web3 initiative. It follows the launch of the “αU” (Alpha You) metaverse and Web3 service earlier in March, that allows any user to become a creator. 

The Oasys token was trading near a three-week low of US$0.0465 at 10:00 p.m. on Monday in Hong Kong, down over 13% in the past month, according to CoinMarketCap data.

See related article: DeFi revenue remains resilient despite Curve Finance hack

Animoca Brands, a Hong Kong-based software and investment giant specializing in blockchain entertainment, announced Monday that it has raised US$20 million to accelerate the development of Mocaverse, its flagship project to build a decentralized metaverse.

See related article: Animoca Brands says it holds US$3.4 bln in assets

Fast facts

The new capital will be used to develop Mocaverse’s core infrastructure, such as its digital identity system and loyalty program. It will also be used to acquire new partners and expand the project’s reach.

The funding round was led by Hong Kong-based venture capital firm CMCC Global, along with other investors including Kingsway Capital, Liberty City Ventures, GameFi Ventures, Sky Mavis founder Aleksander Larsen, founder of Yield Guild Games Gabby Dizon, and institutional investors of Koda Capital.

Mocaverse is a decentralized metaverse that aims to empower users to create their own digital identities, accrue reputation, and earn and spend loyalty points. It will also serve as a platform for users to access a variety of blockchain-powered games, applications, and services.

Mocaverse will soon launch Moca ID, a non-transferrable NFT collection that will allow users to create their own on-chain identities. Moca ID holders are expected to gain exclusive access to certain metaverse features and the opportunity to earn loyalty points through active engagement. 

“In addition to empowering users to participate in a vibrant community that generates new economic opportunities, Mocaverse will also serve as the digital identity, reputation, and loyalty system for other decentralized organizations,” chairman and co-founder of Animoca Yat Siu said in the press release.

See related article: Korea Blockchain Week: diverging crypto paths for the US and Asia

FTX cryptocurrency exchange has filed a lawsuit against LayerZero Labs, the company behind cross-chain interoperability protocol LayerZero, to recover US$21.37 million that LayerZero allegedly withdrew from the exchange illegally prior to its Chapter 11 bankruptcy.

See related article: The rise and continuing fall of Sam Bankman-Fried: A step-by-step guide to his case so far

Fast facts

FTX’s complaint alleges that LayerZero exploited Alameda Ventures, the venture capital arm of FTX’s sister company Alameda Research, by withdrawing money in the time of financial difficulties at FTX using insider knowledge.

On top of the US$21 million recovery, FTX also seeks to cancel agreements made prior to the collapse.

Alameda Ventures entered a series of transactions with LayerZero from January to May last year, including Alameda paying over US$70 million across two transactions to purchase a 4.92% stake in LayerZero. 

In March, Alameda Ventures also paid another US$25 million for 100 million STG tokens at Alameda’s public auction. STG is the native token for StarGate Finance, a cross-chain liquidity platform built on LayerZero.

In February 2022, LayerZero lent $45 million to Alameda Research under a promissory note bearing an annual interest rate of 8%. When FTX started to collapse in November 2022, LayerZero sought a deal for the return of its stake owned by Alameda in exchange for the forgiveness of the US$45 million loan. 

Another deal was reached after the FTX collapse for LayerZero to purchase back 100 million STG tokens at a discount for US$10 million on Nov. 9, 2022, but this transaction was not completed as neither party transferred or paid for the tokens. 

FTX’s filing described that this “fire-sale” capitalized on Alameda’s financial distress.

FTX also wants to recoup US$13 million withdrawn by LayerZero’s former chief operating officer Ari Litan and US$6.65 million by LayerZero’s subsidiary Skip & Goose.

Bryan Pellegrino, the co-founder and chief executive officer of LayerZero Labs, wrote on X social media that FTX suit is “filled with unsubstantiated claims,” explaining that the company has made continued efforts to address issues that have been ignored by FTX.

FTX and its sister hedge fund Alameda Research filed for Chapter 11 bankruptcy protection on Nov. 1. Allegations of misappropriation of billions of dollars in client funds and other wrongdoings soon followed.

Now led by corporate restructuring expert John J. Ray III, FTX is trying to sell, stake and hedge the exchange’s US$3 billion of crypto holdings. The Wall Street Journal reported in late June that the company is now mulling a revival.

FTX is also trying to claw back millions of dollars it paid celebrity endorsers and sports teams prior to its bankruptcy. The list includes Shaquille O’Neal, tennis pro Naomi Osaka and the Miami Heats.

See related article: Former FTX exec Ryan Salame to forfeit US$1.5 billion after pleading guilty to charges

The U.S. Securities and Exchange Commission (SEC) submitted a filing last Friday that pushed the court of the Southern District of New York to appeal its ruling on the agency’s lawsuit against Ripple Labs.

See related article: Former FTX exec Ryan Salame to forfeit US$1.5 billion after pleading guilty to charges

Fast facts

The SEC requested the court review its prior ruling by Judge Analisa Torres, which posed “knotty legal problems,” according to the filing.

In July, a summary judgment by Judge Torres ruled that Ripple’s XRP sales to institutional investors violated securities laws, but sales on public exchanges to retail investors did not.

In the midst of the legal tussle, Ripple Labs announced last Friday that it will acquire Nevada-based crypto infrastructure startup Fortress Trust, giving Ripple a regulatory license in the state of Nevada. The terms of the deal were not disclosed.

In the recent filing, the SEC stressed the need for legal clarification, claiming that there are two or more colliding opinions in U.S. courts on whether similar offerings pass the Howey test. The Howey test is a legal test that the SEC uses to determine whether a transaction qualifies as an investment contract and thus constitutes a financial security. 

The SEC filed a motion to certify an interlocutory appeal against Ripple Labs on Aug. 18. 

Ripple then filed an opposition to the SEC’s motion last week that SEC’s claims to appeal are not legally sufficient to warrant one. The regulator first sued Ripple for allegedly offering XRP as an unregistered security in December 2020.

See related article: U.S. CFTC charges three DeFi projects for illegal derivatives offerings

Former FTX top executive Ryan Salame pleaded guilty Thursday in New York to two criminal charges related to the collapse of the cryptocurrency exchange last November. Salame has agreed to forfeit approximately US$1.5 billion, including two real estate properties and a Porsche automobile, according to The New York Times.

See related article: Sam Bankman-Fried’s lawyers granted unlimited prison visits; FTX tries to sell crypto holdings

Fast facts

Salame, the former co-chief executive of FTX’s Bahamas-based subsidiary FTX Digital Markets, pleaded guilty to charges of conspiracy to operate unlicensed money transmitting business and conspiracy to make unlawful political contributions, according to the U.S. Attorney’s Office in the Southern District of New York.

Salame is the fourth FTX top-level associate to plead guilty to charges involved with FTX, following Nishad Singh, Gary Wang and Caroline Ellison. 

The court trial for FTX founder Sam Bankman-Fried is expected to take place on Oct. 3, over his alleged multibillion-dollar wire and securities fraud charges.

Bankman-Fried was jailed Aug. 11 for witness tampering, following his arrest in the Bahamas in December 2022. He maintains his innocence and has pleaded not guilty to all 13 charges brought against him.

FTX and its sister hedge fund Alameda Research filed for Chapter 11 bankruptcy protection on Nov. 1. Allegations of misappropriation of billions of dollars in client funds and other wrongdoings soon followed.

Now led by corporate restructuring expert John J. Ray III, FTX is trying to sell, stake and hedge the exchange’s US$3 billion of crypto holdings. The Wall Street Journal reported in late June that the company is now mulling a revival.

See related article: Why FTX deserves a second chance

The Commodities Futures Trading Commission (CFTC) charged three U.S.-based decentralized finance (DeFi) protocols – Opyn, ZeroEx and Deridex – on Thursday for omitting necessary registrations as a merchant and illegal offerings of digital asset commodities.

See related article: US response to crypto is like ‘deer caught in headlights,’ says ex-CFTC chair

Fast facts

CFTC accused the projects of illegally offering “leveraged and margined” digital asset commodity transactions. Deridex and Opyn are charged with failing to register as a swap execution facility or a designated contract market, and as a futures commission merchant, according to the CFTC release.

The commission ordered Opyn, ZeroEx, and Deridex to pay penalties of US$250,000, US$200,000, and US$100,000, respectively, along with a cease and desist of operations in violation with CFTC rules.

The projects have agreed to the penalties to settle the charges.

“Somewhere along the way, DeFi operators got the idea that unlawful transactions become lawful when facilitated by smart contracts,” said CFTC director of enforcement Ian McGinley in the press release. 

“They do not. The DeFi space may be novel, complex, and evolving, but the Division of Enforcement will continue to evolve with it and aggressively pursue those who operate unregistered platforms that allow U.S. persons to trade digital asset derivatives,” McGinley said.

See related article: Binance, Zhao sued by CFTC for alleged regulatory violations