Binance’s BNB Chain to Launch a Web3 Course in Latin America

Key Insights:

  • BNB Chain is preparing to launch a Web3 development course in collaboration with Platzi. 
  • The program aims to be accessible to 30,000 students. 
  • El Salvador has introduced a new grassroots diploma program called Mi Primer Bitcoin.

As a region where 51% of consumers have made at least one transaction with cryptocurrency according to data from Mastercard, Latin America is considered to be a hub for adoption and crypto-related activity.

As such, Binance’s BNB Chain is preparing to launch a Web3 development course for students in the region in collaboration with Latin America-focused education platform Platzi.

Web3 Initiative

The course, which aims to be accessible to 30,000 students, will act as a major educational resource available in Spanish for Web2 developers to build on Web3 with BNB Chain.

The goal of the initiative is to further adoption of blockchain technology and Web3 education in the region as accessibility and education remain crucial barriers to entry in Latin America.

Notably, the Binance Smart Chain and the Binance Chain merged to form BNB Chain, which is an abbreviation for ‘Build ’N Build’ according to the company’s CEO Changpeng Zhao. The BNB Chain comprises the BNB Beacon Chain for governance and the BNB Smart Chain, which remains Ethereum Virtual Machine (EVM) compatible.

Overall, BNB Chain’s investment director Gwendolyn Regina has stated that Binance hopes to increase accessibility to resources so that users can build Web3 tools on BNB Chain, as well as supporting the development of blockchain adoption in Latin American.

Latin American Adoption

According to a new survey conducted by Mastercard, more than a third of Latin Americans said they have made an everyday purchase with a stablecoin, while 11% of respondents reported having made a purchase using a digital asset.
In fact, according to Chainalysis research, Latin America has consistently captured between 8% and 10% of global cryptocurrency activity, while decentralised finance (DeFi) applications continue to gain traction in the region as inflation and macroeconomic instability soars.

El Salvador, which made the headlines last year when it became the first country to adopt Bitcoin (BTC) as legal tender, has also introduced a new grassroots diploma program called Mi Primer Bitcoin, or ‘My First Bitcoin’ which aims to increase crypto literacy among teenagers. The program, which has been endorsed by the Salvadoran government, includes a 10-week long course that is split into four parts.

In addition, Binance and Mastercard released prepaid crypto cards this month in Argentina. Argentine cardholders can use Bitcoin, BNB and other cryptocurrencies to make purchases as well as ATM withdrawals in fiat wherever Mastercard is accepted. Moreover, they can earn up to 8% back in cryptocurrency from certain purchases.

Coinbase Faces SEC Probe Over Crypto Yield and Staking Products

Key Insights:

  • Coinbase has received investigative subpoenas over its yield and staking products.
  • The SEC has requested documents and information about certain customer programs, operations, and existing and intended future products.
  • The regulator claims that Coinbase listed at least nine digital assets that should have been registered as securities.

Last month, Coinbase made the headlines for all the wrong reasons when it was revealed that the U.S. Securities and Exchange Commission (SEC) is investigating whether the company allowed Americans to trade digital assets that should have been registered as securities.

The popular crypto exchange is also under another investigation over its staking programs and yield-generating products.

Crypto Yield and Staking Products

In its most recent quarterly filing, Coinbase has revealed that the SEC has sent the company investigative subpoenas over its yield and staking products.

Coinbase also shared that it has received requests from the SEC for documents and information about certain customer programs, operations, and existing and intended future products, including the company’s processes for listing assets and the classification of certain listed assets.

Yield farming refers to a cryptocurrency investment strategy that allows users to lock up funds in order to earn rewards in the process. Coinbase’s yield-generating products enable eligible customers to earn yield by lending their crypto to third-party decentralised finance (DeFi) protocols in order to earn fixed or variable interest.

On the other hand, staking involves holding funds in a cryptocurrency wallet to support the operations of a blockchain network and earning rewards in the process. It requires a lockup where your crypto can’t be transferred for a certain period of time. Coinbase recently launched Ethereum (ETH) staking for U.S. institutional clients on Coinbase Prime.

Staking and yield-generating products have gained traction worldwide whilst catching the eye of regulators. For example, the UK’s tax agency, Her Majesty’s Revenue and Customs (HMRC) updated its guidance on the taxation of lending and staking in proof-of-stake (PoS) networks earlier this year.

Ongoing Investigations

Coinbase, which boasts over 100 million users in over 100 countries, is facing investigations on multiple fronts, including a claim from the SEC that it listed at least nine digital assets that should have been registered as securities.

More specifically, an ex-Coinbase employee was charged last month in the first federal case alleging insider trading in virtual currencies. The SEC and the Department of Justice (DOJ) filed civil and criminal charges against former product manager Ishan Wahi, his brother Nikhil Wahi and their friend, Sameer Ramani for sharing confidential information about pending announcements of new cryptocurrencies.

Importantly, the case also underscored the SEC’s assertion about the digital assets that it considers to be securities. A point of contention between the regulator and Coinbase is that the latter has consistently stated that it does not host securities of any sort. Coinbase’s Chief Legal Officer, Paul Grewal has officially denied these allegations.

In the United States, a security is defined by the Howey Test, a framework created by the Supreme Court for determining whether an asset is an investment contract and should therefore fall under the SEC’s jurisdiction.

Crypto Exchange Hotbit Suspends Services as Authorities Freeze Funds

Key Insights:

  • Senior managers at the company have been subpoenaed by law enforcement.
  • The alleged criminal misconduct of a former employee has led to authorities freezing some of Hotbit’s funds. 
  • The firm has suspended trading, deposits and withdrawals with no timeframe in place for resumption. 

Hotbit, one of Asia’s leading cryptocurrency exchanges, is in hot water after several of its senior managers have been subpoenaed by law enforcement following the freezing of some company funds.

This comes as an ex-employee of the company, who left in April this year, had involvement in an external project that might have violated criminal laws.

Suspended Services

The cryptocurrency exchange, which provides trading services for major coins like Bitcoin (BTC) and Ethereum (ETH), has officially suspending trading, deposits and withdrawals. The firm notes that there is currently no timeframe in place for resumption.

Hotbit has confirmed that an ex-employee who got involved in an external project last year “unbeknownst” to the company, is suspected of breaking the law, although it is not yet clear how the alleged criminal misconduct led to a law enforcement freeze on users’ funds.

While senior managers at Hotbit are assisting law enforcement with their investigation, details about what the external project related to or which specific laws were breached are yet to be disclosed.

What is evident is that the freezing of some of Hotbit’s funds by authorities has prevented it from “running normally”, according to the company which is no longer operational in its services. Notably, the cryptocurrency exchange is registered in Hong Kong and Estonia, with most of its employees originating from China, Taiwan and the United States.

Cascading Effects

The crypto market, which collapsed in May after the algorithmic stablecoin UST lost its peg to the U.S. dollar, saw its market capitalisation fall below $1 trillion for the first time since January 2021. As Terra (LUNA) crashed, wiping out nearly $40 billion in investors’ capital, so too did other cryptocurrencies.

In response, several high-profile crypto companies have suspended trading, deposits and withdrawals amid a liquidity crisis that saw the price of many major coins plummet.

In the case of Hotbit, all unfulfilled open orders have been cancelled to prevent losses, while all leveraged exchange-traded fund (ETF) positions were forcibly liquidated according to their values on August 10.

Troubled crypto exchange Voyager Digital recently launched a ‘Plan of Reorganisation’ to enable clients to regain access to their accounts and subsequently filed for Chapter 11 bankruptcy. The Toronto-based firm estimates that it has more than 100,000 creditors and somewhere between $1 and $10 billion in assets, and liabilities worth the same value.

Similarly, one of the world’s leading crypto lending platforms, Celsius paused all transactions and withdrawals across its network in the wake of Terra’s collapse and then filed for Chapter 11 bankruptcy protection in the Southern District of New York in mid-July.
Singapore-headquartered Zipmex recently sought bankruptcy protection against legal action from creditors shortly after freezing withdrawals on its platform, but has since partially resumed withdrawals.

Thailand’s SEC Greenlights 4 Crypto Companies Amid Zipmex Turmoil

Key Insights:

  • Thailand’s regulators have granted operating licenses to Krungthai XSpring, T-BOX, Coindee and Leif Capital Asset Management.
  • There are now 21 fully regulated digital asset operators in the country. 
  • Crypto traders on government-approved exchanges are exempt from a 7% value-added tax. 

Thailand, a country with over 3.6 million cryptocurrency users, was one of the first in Southeast Asia to issue legislation that specifically addresses digital assets – opening its doors to crypto-related businesses.

In fact, the Tourism Ministry has gone as far as to outline plans to transform the country into a cryptocurrency haven for foreign travellers. In light of this, Thailand’s financial regulator has officially given the green light to several crypto firms.

License

Thailand’s Securities and Exchange Commission (SEC) has granted licenses to four more digital asset operators. These include Krungthai XSpring, a full-service brokerage linked to one of the country’s leading banks and cryptocurrency exchange T-BOX.

The other two companies that secured regulatory approval include crypto advisor and fund manager Coindee and Leif Capital Asset Management, which also manages funds. Notably, the four firms are yet to commence operations as the SEC is undertaking an inspection of their services.

This news means that there are now 21 fully regulated digital asset operators in Thailand, consisting of nine exchanges, nine brokers and three fund managers. It comes as the SEC launched an investigation into Singaporean exchange Zipmex (which also operates in Thailand) for allegedly violating trading rules by suspending withdrawals for customers last month. Shortly after, the SEC announced that Zipmex customers can submit information via an online forum on its official website.

The regulator claims that Zipmex cited inadequate reasons for suspending withdrawals and following this, the firm resumed withdrawals for some altcoins while larger assets such as Bitcoin (BTC) and Ethereum (ETH) remain frozen.

Crypto Stance

As a country where 5.2% of the total population own digital assets, Thailand was considered to have a more liberal and progressive stance post-2018 when the Digital Asset Act, which initially aimed to address security, fraud and initial coin offerings (ICO), was enacted.

Over time, regulations evolved and more recently, the government scrapped its planned 15% withholding tax on cryptocurrency transactions. The Chulalongkorn University and blockchain network Tezos also partnered to create the country’s first blockchain education and research program.

Thailand has even eased tax rules until the end of 2023 in order to boost the industry so that crypto traders on government-approved exchanges are exempt from a 7% value-added tax (VAT).

However, Thailand’s Security and Exchange Commission banned the use of crypto as a means of payment on April 1 this year, citing money laundering and financial instability concerns. The SEC stated that digital assets do not provide improved efficiency to the payments market due to their volatility and high transaction fees, but stressed that the ban is not on crypto trading – just the use of crypto for payments.

Nonetheless, Thai crypto volumes surged 600% in 2021 as the bull market was in full swing. Earlier this year, it was announced that the world’s largest crypto exchange by trading volume, Binance is seeking to re-establish itself in Thailand by launching a jointly owned Gulf Binance crypto exchange with Gulf Innova.

Crypto Lender Voyager to Return $270 Million in Customer Funds

Key Insights:

  • U.S. bankruptcy Judge Michael Wiles has granted approval for Voyager to return $270 million in customer funds. 
  • Last month it was revealed that Voyager held custody of $1.3 billion in customer crypto assets. 
  • Voyager has confirmed that there are as many as 88 interested parties keen to bailout the company from its financial troubles.

It comes as welcome news that bankrupt crypto brokerage firm Voyager Digital has secured approval to return $270 million in customer funds, settling one of the largest obstacles it has faced since filing for Chapter 11 bankruptcy.

More specifically, Voyager filed for bankruptcy a week after suspending withdrawals, trading and deposits on its platform.

Customer Funds

The Toronto-based firm, which is estimated to have more than 100,000 creditors, somewhere between $1 and $10 billion in assets and liabilities worth the same value, received the approval from U.S. bankruptcy Judge Michael Wiles who is overseeing Voyager’s case.

Wiles ruled that the company provided “sufficient basis” to support its contention that customers should be allowed access to the custodial account held at Metropolitan Commercial Bank (MCB).

While Voyager has received approval to return $270 million in customer cash, the question remains as to whether crypto assets on its platform belongs to customers or the company undergoing bankruptcy proceedings. It could be the case that this decision will fall onto presiding Judge Wiles.

Last month it was revealed that Voyager held custody of $1.3 billion in customer crypto assets spread across 3.5 million active users. According to a court document, roughly $100 to $200 million was held in these accounts for the benefit of customers and not held in Voyager’s bankruptcy estate.

Voyager’s case had been pending a reconciliation and fraud prevention process due to the potential risk of non-eligible customers fraudulently claiming cash from MCB. It has not yet been specified how customers will receive their funds, however one option would be to allow other companies to bid for Voyager’s assets.

Bailout

During a hearing presentation this week, Voyager confirmed that there are as many 88 interested parties keen to bailout the company from its financial troubles. As well as being in “active discussions” with a number of interested parties, it was revealed in its filing that Voyager entered into confidentiality agreements with 37 potential buyers.

One of the most high-profile bids came from Alameda Ventures and FTX last month. Alameda Ventures had proposed to buy all of Voyager’s assets and outstanding loans in order to offer early liquidity to customers through the FTX U.S. exchange.

FTX’s CEO Sam Bankman-Fried argued that the move would give Voyager’s customers the ability to access assets that would otherwise be locked up for a significant time as the case was navigating through bankruptcy court.

However, lawyers representing Voyager labelled FTX’s proposal as a “low-ball bid” that was designed to generate publicity and did not add value to customers. Their reasoning for this was that Alameda Ventures proposed a liquidation where FTX would have served as the liquidator, which could have potentially mired how the value of Voyager’s cryptocurrency assets and loans was determined.

As it currently stands, the company’s closest proposal to a restructuring plan would distribute funds to customers in some combination of cash, their cryptocurrency holdings, proceeds from the Three Arrows Capital recovery,  common shares in the newly reorganised company and Voyager tokens.

The Essential Checks to Make When Choosing a Crypto Exchange

Key Insights:

  • Users should take time to thoroughly research the exchange they’re considering.
  • Exchanges should not be in the business of adding any and all new coins as this presents costly risks to users, says the CEO of deVere Group.
  • Users ought to opt for exchanges with higher trading volumes as liquidity is crucial.

According to the CEO of deVere Group, Nigel Green “crypto is inevitably the future of money. But you need to get it right from the get-go”. This certainly rings true, especially as many investors are still reeling from losses during May’s crypto market crash.

There are currently over 20,000 tokens in existence, with global crypto adoption rising by over 880% last year. In fact, TripleA estimates that there are now over 320 million crypto users worldwide. In light of such exponential growth, it is more imperative than ever for investors to evaluate where and how to transact in cryptocurrencies. That means choosing the right crypto exchange, as well as deciding how you will use the platform.

Due Diligence

Green, who runs one of the world’s largest independent financial advisory, asset management and fintech organisations, states:

“The issues facing some of the biggest crypto exchanges right now highlight why you should spend some time on choosing the right one. Don’t necessarily just jump on the ones with the flashiest TV ads and celebrity ambassadors. Security, liquidity, fees, history and user experience are essential checks you should make”.

The CEO is referring to the recent string of freezes enacted by several cryptocurrency exchanges that stemmed from Terra’s collapse and the loss of nearly $40 billion in investors’ capital. More specifically, the crypto market crashed in May when the algorithmic stablecoin UST lost its peg to the U.S. dollar and the price of LUNA dropped 98%. The result was a market capitalisation that fell below $1 trillion for the first time since January 2021.

In response, crypto exchanges like CoinFLEX, Zipmex and Vauld halted withdrawals and deposits. However, CoinFLEX later allowed users to withdraw up to 10% of their funds and Zipmex has resumed withdrawals for some altcoins, while Bitcoin (BTC) and Ethereum (ETH) remain frozen.

Green added: “You should see which company owns the exchange. Is it well-established? Is it a global company that can handle complicated issues across multiple jurisdictions? Is it experienced in both fintech and traditional financial services? Is there a proper client service department to deal with any issues quickly and effectively? Are there news and educational resources on offer?”.

Coin Offering List

Considering that there are tens of thousands of cryptocurrencies in existence, it’s important to recognise that not all exchanges offer every digital asset. Users ought to think about what coins they are most interested in and whether the exchange has a suitable menu.

For instance, a well-known exchange like Coinbase offers more than 526 crypto-to-crypto trading pairs, while Kraken lets you trade more than 160 coins. When examining a platform’s coin offering list, Green said:

“Most exchanges add to their coin offering list on a regular basis as each one has a different set of characteristics. But the exchange should not be in the business of adding any and all new cryptos as clearly this presents obvious, avoidable and potentially costly risks to users”.

As such, he encourages platforms to conduct due diligence before any new coin is listed, adding that users “should ensure this is part of the exchange’s policy”. Notably, there are exchanges, often based overseas, that allow users to trade less mainstream coins that struggle to get listed. However, not all exchanges are subject to same level of regulation.

Security-first Mentality

When it comes to cryptocurrency exchanges, reputation counts and users ought to take time to thoroughly research the platform they’re considering. What do other users say about the exchange? Have there been any security concerns in the past? If so, how did the exchange address such issues?.

“Most crypto exchanges offer basic protections like two-factor authentication, others will need official identification such as a passport or driver’s licence to open a new account. Some also have authentication codes required when you buy or sell, or if you make major account changes” explains the deVere CEO.

In December 2021, hackers stole around $196 million worth of tokens from BitMart during a large-scale security breach. Instances like this signal the importance of choosing a crypto exchange with strong measures in place against such cyberattacks, or a user can be on the lookout for additional features such as Crypto.com’s exchange mobile app which supports biometric login and uses facial and fingerprint identification to verify identity.

Nonetheless, major exchanges like Kraken and Gemini typically require users to provide government-issued identification when opening a new account in order to further enhance security and ward off illicit actors.

The Bigger Picture

Another equally vital practice is to compare fees as you may have combed through the leading exchange offerings and reams of data to determine the top service only to forgo how the exchange will impact your investing daily.

An exchange can have an excellent reputation and no history of hacks or scams, but you’ll find that it charges high fees for depositing fiat currency and low transaction fees between coins. Thus its imperative to compare different fee structures that are all targeted to a particular type of investor.

For example, if you are a day trader who doesn’t want to incur high individual transaction fees or if you just want to buy a small amount of crypto, fees will be less relevant than other features aimed at frequent traders. Fee tiers are usually based on your total trading volume over a 30-day period and the percentage you pay generally lowers as the size of your trades increase.

Consider how the fees would impact your investing based on your style; do you plan to be highly active, executing transactions every day? If so, it may be best to opt for an exchange with lower transaction fees. Green concluded: “Liquidity is important. You’ll want to know that you can exchange your traditional currencies into crypto and vice versa with no hassle. A good way to look at this is by trading volumes – the higher the better”.

Overall, in the words of the deVere CEO, the process of choosing the right crypto exchange may be rigorous and it “might take time, but your future self will thank you for it”.

Zipmex Files for Debt Relief in Singapore

Key Insights:

  • Zipmex’s solicitors have filed five moratorium applications in Singapore. 
  • The company seeks to protect itself against third party actions, claims and proceedings for a period of six months.
  • Zipmex has resumed withdrawals from its trade wallet.

Singapore-headquartered Zipmex is seeking bankruptcy protection against legal action from creditors shortly after freezing withdrawals on its platform citing volatile market conditions.

The cryptocurrency exchange has confirmed that its solicitors in Singapore have filed five moratorium applications.

Bankruptcy Protection

Zipmex, which is being represented by lawyers from Morgan Lewis Stamford LLC, has filed for legal authorisation from debtors to postpone payment, under Section 64 of Singapore’s Insolvency, Restructuring and Dissolution Act (IRDA).

IRDA, which came into effect in July 2020, consolidates laws relating to debt restructuring previously found in the Bankruptcy Act and the Companies Act, into a single statue.

In accordance with IRDA, Zipmex seeks to protect itself against third party actions, claims and proceedings for a period of six months while the filing is active.

Under the nation’s laws, this filing provides Zipmex with automatic protection from the continuation or commencement of proceedings by claimants for 30 days, or at least until after a Singapore court makes its final decision.

Additionally, it has been revealed that the company already filed for credit relief on July 22. All of its subsidiary entities, consisting of Zipmex Asia Pte Lt, Zipmex Pte Ltd, Zipmex Company Limited, PT Zipmex Exchange Indonesia and Zipmex Australia Pty Ltd, were included in the filing.

Resumed Withdrawals

Despite halting withdrawals last week due to the “resulting financial difficulties” of their key business partners, Zipmex has resumed withdrawals from its trade wallet but said transfers, deposits and trade will continue to be disabled from its Z Wallet.

The company reportedly had $100 million in exposure to crypto lender Babel Finance, which was at risk of default and this has been large factor in causing its financial woes.

Last month, Babel Finance halted withdrawals and redemptions citing unusual liquidity pressures. By the end of last year, the company had an outstanding loan balance of $3 billion, up from $2 billion the previous February.

What’s more, Coinbase made an offer to acquire Zipmex earlier this year but the acquisition fell through and instead, a strategic investment was made in the company. Although the amount of investment has not been disclosed, the firm confirmed that Coinbase opted out of the acquisition due to the bear market.

In any case, the company did raise $52 million last year during a Series B funding round that valued it at $400 million. One of Thailand’s largest banks, Krungsri Finnovate participated in the round, as well as major multimedia companies Plan B Media and Master Ad. In March this year, Zipmex secured an additional $11 million as part of its series B round.

Bankrupt Voyager Reacts to FTX’s Proposal Calling it a ‘Low-ball’ Bid

Key Insights:

  • Voyager recently suspended withdrawals, trading and deposits on its platform and filed for Chapter 11 bankruptcy.
  • FTX is working with West Realm Shires and Alameda Ventures to allow Voyager customers to create new accounts on the exchange.  
  • Voyager’s lawyers claim that the joint proposal disrupts the bankruptcy process.

Last week it was announced that Sam Bankman Fried’s FTX is planning to offer early liquidity to customers of bankrupt crypto lender Voyager Digital.

Voyager Digital recently suspended withdrawals, trading and deposits on its platform, and filed for Chapter 11 bankruptcy after it was revealed that the Toronto-based firm has more than 100,000 creditors, somewhere between $1 and $10 billion in assets, and liabilities worth the same value.

Voyager’s Loan Book

The company’s subsidiary, Voyager Digital LLC previously issued a default notice to troubled hedge fund Three Arrows Capital (3AC) for the its failure to make required payments for a loan of 15,250 Bitcoin (BTC) and $350 million USD Coin (USDC).

Voyager’s loan book reportedly accounted for nearly half of its total assets, and roughly 60% of that loan book was comprised of loans to Three Arrows Capital.

As a result, FTX is now working with the company that owns FTX.US, West Realm Shires, as well as Alameda Ventures to allow Voyager customers to create new accounts on the exchange.

Select Voyager customers will have an opening cash balance funded by an early distribution on a portion of their bankruptcy claims and they can withdraw the cash immediately or use it to purchase digital assets on FTX.

Bankman-Fried noted that the purpose of the joint proposal is to help establish “a better way to resolve an insolvent crypto business” in a way that allows customers to obtain early liquidity and reclaim a portion of their assets without “forcing them to speculate on bankruptcy outcomes and take one-sided risks”.

In addition, Voyager has secured loans from Alameda Research to shore up protection for customer assets in the form of a non-binding term sheet for a $200 million credit facility compiled using a mix of cash and USDC. The sheet also includes a revolving line of credit for 15,000 Bitcoins (BTC).

Court Filing

In a surprising twist, lawyers representing bankrupt Voyager have labelled FTX’s proposal as a “low-ball bid dressed up as a white knight rescue”.

In the court filing, Voyager’s lawyers said the plan “transfers significant value to Alameda/FTX, and completely eliminates the value of assets that are of no interest to Alameda/FTX”.

The lawyers claim that AlamedaFTX’s proposal, which was made “in contravention of the proposed Bidding Procedures” has been designed to generate publicity and does not add value to customers. Their reasoning for this is that AlamedaFTX proposes a liquidation where FTX serves the role of liquidator, which could potentially mire how the value of Voyager’s cryptocurrency assets and loans is determined.

Bankman-Fried responded by saying that the move would give Voyager’s customers the ability to access assets that would otherwise be locked up for a significant time as the case goes through bankruptcy court. He added: “Our offer would give Voyager customers back 100% of the remaining assets that Voyager has, including claims on anything recovered in the future”.

CEO Steven Ehrlich recently confirmed that Voyager is undertaking a ‘Plan of Reorganisation’ that aims to enable clients to regain access to their accounts. Ehrlich reiterated that reorganising the company is the “best way” to protect assets on the platform so that Voyager can continue operating.

This means that customers with crypto in their account will receive a combination of crypto, proceeds from the Three Arrows Capital recovery, common shares in the newly reorganised company, and Voyager tokens.

Crypto Exchange Zipmex Freezes Withdrawals Citing Volatile Market Conditions

Key Insights:

  • Zipmex has halted withdrawals on its platform until further notice citing volatile market conditions. 
  • The company reportedly lent out $100 million to Babel Finance.
  • Zipmex raised $52 million last year during a Series B funding round that pushed its valuation to $400 million.

Despite the company dismissing earlier rumours about potential financial trouble, Southeast Asian crypto exchange Zipmex has announced that it will freeze withdrawals on its platform due to a “combination of circumstances” beyond its control.

This means that users are blocked from taking direct custody of their coins until further notice.

Financial Woes

The Singapore-headquartered company reportedly lent out $100 million to asset manager Babel Finance — funds that are now at risk of default.

Last month, Babel Finance halted withdrawals and redemptions citing unusual liquidity pressures. By the end of last year, the company had an outstanding loan balance of $3 billion, up from $2 billion the previous February.

Although the exchange did not provide further details about its decision, Zipmex highlighted volatile market conditions and the “resulting financial difficulties of our key business partners” that have pushed it to take such action.

Earlier this year, cryptocurrency exchange Coinbase made an offer to acquire Zipmex but the acquisition fell through and instead, a strategic investment was made in the company. Although the amount of investment has not been disclosed, the firm confirmed that Coinbase opted out of the acquisition due to the bear market.

Nonetheless, the company did raise $52 million last year during a Series B funding round that valued it at $400 million. One of Thailand’s largest banks, Krungsri Finnovate participated in the round, as well as major multimedia companies Plan B Media and Master Ad.

The company raised an additional $11 million in March this year as part of its series B round.

A String of Freezes

This news comes amidst a series of high-profile crypto firms facing financial difficulties due to a global sell-off in the crypto markets.

Earlier this month, crypto lender Voyager Digital filed for Chapter 11 bankruptcy. The Toronto-based firm estimates that it has more than 100,000 creditors and somewhere between $1 and $10 billion in assets, and liabilities worth the same value.

Voyager Digital joined Three Arrows Capital in filing for bankruptcy, however the latter filed a Chapter 15 petition tied to an ongoing liquidation effort ordered by a court in the British Virgin Islands. Voyager Digital recently entered into a $500 million loan agreement with trading firm Alameda Research to cover losses from its exposure to 3AC.

Notably, the CEO of cryptocurrency exchange FTX has been bailing out a number of firms, for instance, the company signed a deal this month with troubled crypto lender BlockFi with the option to acquire for up to $240 million and has extended loans to Voyager Digital, totalling $485 million in cash and Bitcoin (BTC). FTX itself is also reportedly looking into raising a new round of capital.

Crypto Exchange Binance Fined $3.4 Million by Dutch Central Bank

Key Insights:

  • DNB claims that Binance offered services to Dutch citizens without the required registration.
  • A public warning was issued against the company last year.
  • Binance received a larger penalty due to its trading volume. 

In a major blow to Binance, De Nederlandsche Bank (DNB) has slapped the world’s largest cryptocurrency exchange by trading volume with a hefty $3.4 million fine for failing to obtain regulatory approval to operate in the country.

DNB claims that Binance continued to offer services to Dutch citizens without the required registration.

Operating Illegally

According to De Nederlandsche Bank, a penalty was issued in April this year but Binance objected to the fine and indicated that it would appeal. A public warning was also issued against the company in August last year on grounds that it had been violating Dutch money-laundering laws. During this time, DNB had warned that such violations “may increase the risk of customers becoming involved in money laundering or terrorist financing”.

What’s more, the central bank claims that Binance had a competitive advantage against companies possessing a DNB registration during the period it was in non-compliance.

DNB requires virtual asset service providers (VASP) to complete registration under the Money Laundering and Terrorist Financing Prevention Act since May 21, 2020.

The regulator noted that violations committed by Binance are punishable by a third category fine, meaning that the administrative fine has a base amount of €2 million.

Trading Volume

Despite the administrative fine having a base amount of $2.03 million, De Nederlandsche Bank applied a heftier penalty due to the platform’s large trading volume. DNB cited several reasons for such a decision.

According to the regulator, Binance is not only the largest provider of cryptocurrency services worldwide, but it also has a “very large number of customers in the Netherlands” with global daily trading volume amounting to “$13.7 billion”.

The increased penalty was also due to prolonged violations by Binance occurring from May 2020, when DNB introduced the registration obligation, until December 2021.

As it currently stands, Binance has submitted an application for registration, which is being assessed by the central bank. DNB has thus reduced the fine by 5%, in part because Binance has already submitted a registration application and also because the exchange has been “relatively transparent about its operations throughout the process”.  The company has since set up a local branch, Binance Nederland BV.

Besides the setbacks, Binance received a certification from the Bank of Spain this month to operate as a virtual asset service provider in the country. In May,  both France and Italy also licensed the crypto exchange as an official digital asset provider, while Abu Dhabi granted it provisional approval to operate as a broker-dealer in April.

California’s DFPI Investigating Multiple Crypto Lending Companies

Key Insights:

  • DFPI is assessing whether firms that suspended customer withdrawals and transfers have violated its laws.
  • The regulator is particularly focused on companies that offer crypto-interest accounts.
  • This comes as customer funds on many platforms have been locked up for several weeks.

The California Department of Financial Protection and Innovation (DFPI), which oversees the operations of state-licensed financial institutions including banks and premium finance companies, has announced that it is looking into whether firms that suspended customer withdrawals and transfers have violated its laws.

More specifically, the regulator is investigating several U.S-based crypto companies after a series of well-known lenders indefinitely halted withdrawals and transfers between user accounts.

Interest-bearing Crypto Asset Accounts

The Department of Financial Protection and Innovation is particularly focused on “multiple companies” that offer customers interest-bearing crypto asset accounts, or crypto-interest accounts, as well as service providers that “may not have adequately disclosed risks customers face when they deposit crypto-assets onto [lenders’] platforms”.

The overarching purpose of the investigation is to determine whether they are violating laws under the Department’s jurisdiction.

The DFPI previously emphasised that crypto-interest account providers are not governed by the same rules and protections as banks and credit unions, which is especially concerning as some platforms are preventing customers from withdrawing and transferring between their accounts.

As such, the regulator has encouraged consumers to exercise “extreme caution” before responding to any solicitation offering investment or financial services.

In addition, DFPI has expressed how certain crypto-interest account providers have been providing unregistered securities and pointed to two cease and desist orders it recently issued to BlockFi and Voyager Digital to stop their offerings in California.

Locking up Customer Assets

DFPI’s announcement comes after crypto lender Voyager Digital filed for Chapter 11 bankruptcy, becoming the second high-profile crypto company to do so in recent weeks. The Toronto-based firm estimates that it has more than 100,000 creditors and somewhere between $1 and $10 billion in assets, and liabilities worth the same value.

Voyager Digital explained that the move is part of a ‘Plan of Reorganization’ that aims to enable clients to regain access to their accounts. Customers will be able to receive a combination of crypto, proceeds from the Three Arrows Capital recovery, common shares in the newly reorganised company, and Voyager tokens.

Celsius (CEL) has kept withdrawals and transfers frozen since June 12 due to liquidity concerns, with rumours circulating that the company’s management has been debating with lawyers over whether the business should file for Chapter 11 bankruptcy.

The company is currently is seeking restructuring advice from the advisory firm Alvarez & Marsal as it deals with the possibility of insolvency.

The Singapore-based crypto platform Vauld also halted operations last week citing financial difficulties amid volatile market conditions. The company immediately suspended all deposits, withdrawals and trading, and announced that it would only process customer deposits related to its collateralised loans product until further notice.

As it stands, customer funds on many platforms have been locked up for several weeks, with the fate of their depositors’ holdings still uncertain.

CoinFLEX Starts Arbitration Process to Recover $84 Million

Key Insights:

    • Partial withdrawals are set to resume as CoinFLEX enters arbitration.
    • The company is looking to recover $84 million through legal proceedings.
    • CoinFLEX halted withdrawals last month citing extreme volatility in the cryptocurrency market.

CoinFLEX has commenced legal action to recover $84 million in losses from a “large individual customer” who reportedly failed to cover a debt that forced the company to freeze withdrawals platform-wide. CEO Mark Lamb has accused Roger Ver of defaulting on a loan and causing CoinFLEX’s current woes.

The company is also in talks with a large US-based exchange/ATS platform as it seeks to recover from a liquidity crisis that has prevented users from withdrawing funds for nearly three weeks. More specifically, CoinFLEX halted withdrawals on June 23 citing extreme volatility in the cryptocurrency market.

CoinFLEX has confirmed that at some point next week, it hopes to make 10% of customers’ balances available for withdrawal.

However, this will require the company to sell all non-native assets currently locked on the platform into USDC, in addition to temporarily pausing all trading and closing all futures positions.

CoinFLEX is currently looking to raise “a significant amount of funds” and is in conversation with multiple “large” customers about converting their deposits into equity.

This comes after the company launched a Recovery Value USD (rvUSD) token last month to sell off bad debt and rectify liquidity shortages. RvUSD tokens are worth $1 each and buyers can convert their coins to USDC or a combination of USDC and FLEX Coins. The Recovery Value USD token issuance included a 20% annual percentage rate (APR).

Crypto Lender Voyager Digital Files for Chapter 11 Bankruptcy

Key Insights:

  • Voyager Digital has a vague estimate of assets and liabilities between $1 billion and $10 billion.
  • The Toronto-based company has more than 100,000 creditors.
  • Restructuring and recompense plans have been proposed.

A week after suspending withdrawals, trading and deposits on its platform, crypto lender Voyager Digital has filed for Chapter 11 bankruptcy, becoming the second high-profile crypto company to do so in recent days.

The Toronto-based firm estimates that it has more than 100,000 creditors and somewhere between $1 and $10 billion in assets, and liabilities worth the same value.

Hot Water

Voyager Digital explained that the move is part of a ‘Plan of Reorganization’ that aims to enable clients to regain access to their accounts, which would in turn “return value to customers”. CEO Steven Ehrlich reiterated that reorganizing the company is the “best way” to protect assets on the platform so that Voyager can continue operating.

The company’s subsidiary, Voyager Digital LLC had previously issued a default notice to troubled hedge fund Three Arrows Capital (3AC) for the its failure to make required payments for a loan of 15,250 Bitcoin (BTC) and $350 million USD Coin (USDC).

Reports surfaced that Voyager’s loan book accounted for nearly half of its total assets, and roughly 60% of that loan book was comprised of loans to Three Arrows Capital.

Ehrlich confirmed that customers with crypto in their account will receive a combination of crypto, proceeds from the Three Arrows Capital recovery, common shares in the newly reorganized company, and Voyager tokens.

In addition, customers with U.S. dollars in their accounts will be able to access those funds after a reconciliation and fraud prevention process is completed with Metropolitan Commercial Bank.

Notably, the company will continue to pay its employees though trading, deposits, withdrawals and loyalty rewards will remain suspended.

Crypto Market Collapse

Voyager Digital joins Three Arrows Capital in filing for bankruptcy. However, Three Arrows Capital filed a Chapter 15 petition tied to an ongoing liquidation effort ordered by a court in the British Virgin Islands, suggesting that it could be difficult for Voyager to recover the funds it lent out.

The lending platform recently entered into a $500 million loan agreement with trading firm Alameda Research to cover losses from its exposure to 3AC.

The troubled crypto exchange also claimed that it had $110 million in cash, $350 million in cash at the Metropolitan Commercial Bank, $1.3 billion in crypto and was owed $650 million from Three Arrows Capital. It did not specify liabilities.

Chapter 11 bankruptcy procedures put a hold on all civil litigation matters, allowing companies to prepare turnaround plans while remaining operational.

FTX Agrees Deal With BlockFi With Option to Acquire for $240 Million

Key Insights:

  • The deal provides BlockFi with a $400 million revolving credit facility.
  • The final purchase value will depend on BlockFi’s performance and other factors. 
  • CEO Zac Prince claims that the deal will ensure client funds are protected. 

Sam Bankman-Fried’s cryptocurrency exchange FTX has inked a deal with troubled crypto lender BlockFi with the option to acquire for up to $240 million.

The “definitive agreement” provides BlockFi with a $400 million revolving credit facility, with the total value of deal estimated to reach up to $680 million – subject to shareholder approval.

The news was announced by BlockFi CEO Zac Prince who claims that the deal will ensure client funds are protected.

Valuation Rumours

BlockFi’s valuation is a key consideration in the deal and while earlier reports listed it as $25 million, the terms agreed give the company a variable price of up to $240 million based on performance triggers. U.S. news outlet CNBC pegged the valuation at $25 million, which represents a 99% discount from its nearly $5 billion valuation in 2021.

Prince denied CNBC’s reporting, which he dubbed unfounded. Notably, the final purchase value will depend on BlockFi’s performance and Prince also emphasised that the company has not drawn from the credit facility.

Companies use revolving credit facilities as backstop financing to combat adverse effects on other sources of income and for the most part, these facilities remain undrawn.

Prince added: As a matter of principle, we fundamentally believe in protecting client funds. Not only because it’s absolutely the right thing to do, but this also benefits the ongoing health and adoption of crypto financial services worldwide. Therefore, it was important to add capital to our balance sheet to bolster liquidity and protect client funds”.

It was reported that the acquisition could lead to additional BlockFi layoffs since FTX is predominantly eyeing the lending start-up’s technology, investors and counterparties. Both Prince and Bankman-Fried have since denied the prospect of immediate job losses.

Market Volatility

Market volatility following the downfall of Celsius and Three Arrows Capital (3AC) put cryptocurrency lenders in a rout. Fears of a possible U.S. recession due to interest rate hikes from the Federal Reserve worsened the crypto market that was only just last year considered to be a booming industry.

Namely, the crypto market collapsed in May, erasing more than $2 trillion in value. In a week, Terra went from being valued at more than $50 billion to collapsing into a state of disrepair. As Terra collapsed, wiping out nearly $40 billion in investors’ capital, so too did other cryptocurrencies. When the algorithmic stablecoin UST lost its peg to the U.S. dollar and the price of LUNA dropped 98%, it fuelled a slump across cryptocurrencies.

The result was a market capitalization that fell below $1 trillion for the first time since January 2021.

As a result, BlockFi cut 20% of its headcount last month and implemented multiple cost-cutting measures such as reducing marketing spending and executive compensation.

In other news, Bankman-Fried extended loans to crypto broker Voyager Digital, totalling $485 million in cash and Bitcoin (BTC). The 30-year-old billionaire also walked away from an acquisition deal with Celsius after FTX observed a $2 billion hole in the company’s balance sheet. FTX had reportedly entered into talks with Celsius to either provide financial support or acquire the firm outright.

CoinFLEX Launches a $47 Million Recovery Token After Halting Withdrawals

Key Insights:

  • RvUSD tokens are worth $1 each and include a 20% annual percentage rate.
  • CoinFLEX is aiming to sell off bad debt, rectify liquidity shortages and restart user withdrawals.
  • RvUSD will only be for sale to non-U.S-resident investors at a minimum subscription of $100,000 per investor.

Physical futures crypto exchange CoinFLEX has announced the launch of a Recovery Value USD (rvUSD) Token, with issuance likely to run from today until July 1.

RvUSD tokens are worth $1 each and buyers can convert their coins to USDC or a combination of USDC and FLEX Coins.

Outstanding Debt

The drivers behind this decision are plentiful. First, the company temporarily halted withdrawals on June 23 due to extreme volatility in the cryptocurrency market.

Then it was revealed that an unnamed high-net-worth customer owes the exchange an outstanding debt. The customer’s account went into negative equity during the crypto market crash but CoinFLEX described him/her as a “high integrity” individual who has “significant shareholdings in several unicorn private companies and a large portfolio.”

The customer’s equity and margin call obligations prevented their negative balance account from being liquidated, which would have been standard procedure in a normal scenario. In this instance, CoinFLEX opened a one-of-a-kind non-liquidation recourse account and agreed not to liquidate it.

The firm has since confirmed that it will be eliminating non-liquidation accounts as well as making positions public.

CoinFLEX did confirm that the counterparty in question is not Three Arrows Capital, the crypto hedge fund which was recently reported to be considering options, including the sale of assets and a bailout by another firm.

A 20% Annual Percentage Rate

The Recovery Value USD Token issuance includes a 20% annual percentage rate (APR) accrued and paid daily in rvUSD, offering a sizable return to potential investors.

Importantly, RvUSD will only be for sale to non-U.S-resident sophisticated investors at a minimum subscription of $100,000 per investor. A sophisticated investor is one who has an annual income of at least $200,000, a total net worth of at least $1 million and has performed Know Your Customer (KYC) procedures on CoinFLEX.

The company is essentially selling off bad debt through its new $47 million token offering, with additional goals of rectifying a liquidity shortage and restarting user withdrawals. RvUSD is designed to help CoinFLEX recover losses incurred by the account that reached negative equity without being liquidated.

Notably, tokens will be issued to high-income or high-net worth individuals, with fundraising expected to contribute to resumed withdrawals on June 30.

However, the timeline of when CoinFLEX resumes withdrawals and restores the platform to full functionality depends on how much it raises during the token sale. CEO Mark Lamb has expressed optimism that investors will buy the token.

Earlier this month, Babel Finance also announced that it would suspend withdrawals, while Voyager Digital capped customer withdrawals at $10,000 as it dealt with a default on a loan made to Three Arrows Capital.

Binance Launches New Institutional Platform for VIP Investors

Key Insights:

  • Binance has launched an advanced platform for VIP and institutional investors.
  • The platform offers an array of services like advanced custody solutions and over-the-counter liquidity and execution for algorithmic trading.
  • The VIP program offers rewards and privileges based on nine tiers.

The world’s largest cryptocurrency exchange by trading volume, Binance has launched a flagship platform for VIP and institutional investors to trade digital assets.

The advanced Binance Institutional platform is far from linear in its offering and will provide a new suite of trading services aimed at institutions, high-net worth individuals, crypto platforms, family offices, crypto miners, hedge funds and asset managers.

The company has certainly been working on upgrading its institutional offerings such that its new platform will provide a plethora of services ranging from advanced custody solutions to over-the-counter liquidity and execution for algorithmic trading, as well as access to instant crypto pricing.

Users can also expect a suite of broker products and a liquidity program for traders in spot and futures markets. More specifically, the Binance Broker Program will enable enterprise clients to leverage Binance technology for their own businesses.

Nine-tier Program

The VIP program offers rewards and privileges for those individuals whose trading volume climbs up the nine designated VIP tiers. To qualify, an investor must have a 30-day trade volume of at least 1 million BUSD and a balance of at least 25 BNB.

Anyone aiming for the highest tier must have a 30-day trade volume of at least 5 billion BUSD and a BNB balance of at least 5,500. Importantly, VIP privileges include fee discounts and higher 24-hour withdrawal limits.

However, Binance Institutional is not available to customers of its U.S. branch, Binance.US.

Expansion Plans

Despite the crypto winter, Binance has been laser focused on expansion, announcing 2,000 open positions while its rivals cut large parts of their workforce. Also, Binance.US launched zero-fee Bitcoin (BTC) trading this month with plans to eliminate charges for more tokens in the future.

The company recently raised $200 million in a seed round that valued it at $4.5 billion. Investors included a mix of early stage venture capitalists and crypto-native firms such as RRE Ventures, Foundation Capital, Original Capital, VanEck and Circle Ventures.

Notably, Binance is seeking to obtain both SOC 2 and ISO-27001 certifications to bolster its services. The former is issued by auditors who assess the extent to which a company, based on the systems and processes it has in place, complies with security, availability, processing integrity and confidentiality principles.

Meanwhile, ISO-27001, which is considered to be a gold standard certification for information security management, signals that a company’s infrastructure, operations, and team are dedicated to maintaining the highest security standards. Binance already practices strict regulatory compliance in every jurisdiction it operates under for its 90 million registered users.

South Korea’s Second-Biggest Exchange To Suspend Crypto Withdrawals From January 27

Bithumb, which currently holds a 13% domination in the South Korean cryptocurrency exchange market, followed in the footsteps of the country’s third-biggest exchange, Coinone, after it made a similar announcement a few weeks ago.

Bithumb To Stop Withdrawals

With the new Travel Rules being implemented by March 25, the Korean Financial Intelligence Unit has asked all virtual asset service providers to register with the monetary unit. 

This led Bithumb to suspend all the withdrawals until the operated accounts had been registered and reviewed. 

South Korean cryptocurrency exchanges’ domination | Source: Statista

Any unverified personal wallet will not be able to make withdrawals as they are required to perform another set of customer verification certifications (KYC) in order to verify their wallets.

For now, mostly those exchanges that have partnered with the NH Bank are enforcing these regulations as the wallets that are not whitelisted by January 27 will be directly blocked. 

As per the news agency Money Today, investors weren’t happy with the stringent rules of using the video authentication system that they were not used to.

But since the whitelist system implementation is based on the contract of providing the real-name accounts to the bank, the wallets that are not registered will not be able to conduct any virtual asset withdrawal.

The KYC regulation was also implemented for withdrawals to other foreign cryptocurrency exchanges such as Binance.US, Kraken, Bitstamp, blockchain.com (UK), and Bybit (Singapore).

South Korea and Blockchain

Apart from the existing cryptocurrency exchanges, the country itself has been at the forefront of blockchain technology adoption. Just yesterday, The Bank of Korea announced that it successfully completed the first phase of its CBDC (central bank digital currency) trial.

Moving ahead, the bank aims to complete the second round of trials by June this year, during which they seek to test the more complicated procedures.

BitMEX Acquires 250-Year-Old German Bank To Expand Its Operations in Europe

Today the BXM Operations AG announced their plans of purchasing one of the biggest and oldest banks in Germany, Bankhaus von der Heydt. The company’s CEO who is also the CEO of BitMEX itself is leading the deal as part of their bigger picture.

The Bigger Picture…

As declared in their announcement the Bitmex group is looking to gain a strong footing in the European market. Their goal of establishing a one-stop shop for crypto products is focused primarily on Germany, Austria, and Switzerland.

This would further their reach into not only the other parts of Europe but globally as well.

The company has actually been already preparing for this as not too long ago they had the launch of BitMEX Link. As a cryptocurrency brokerage, the BitMEX group aims on using it to create a regulated crypto products powerhouse in the heart of Europe.

This acquisition would play an important role in the expansion and adoption of crypto to the more unaware fiat familiar audience. Since Bankhaus von der Heydt has already amassed a huge user base. 

The BitMEX purchase also serves as a perfect opportunity for the bank given Bankhaus von der Heydt was already looking to engage in blockchain technology to become a one-stop-shop for Digital Assets.

Last year in October the bank was selected by the leading Crypto and Digital Asset Platform for Institutions called Fireblocks. The managing director of Bankhaus von der Heydt, Philipp Doppelhammer stated that

“Fireblocks gives us a secure and easy to use platform to develop complex operational workflows such as moving between asset trading and custody, staking assets in custody or even a direct integration with lending protocols to extend our service portfolio” (sic)

But this isn’t the first instance where we’ll be observing a traditional financial institution engaging with a crypto-specific institution. The interest also comes from the other way around as last November, a Thailand-based bank Siam Commercial Bank acquired a 51% stake in the biggest crypto exchange of Thailand Bitkub for almost $539,000.

Will People Join Crypto Though?

That will always be an important question as the FUD around cryptocurrency is not easy to defeat. However, the overall crypto market’s performance in 2021 certainly would act as a positive driving force for new investors. 

Bitcoin was up by 153% at its peak in 2021

With the emergence of multiple altcoin rallies, the total crypto market rose by 156.8% ($1.202 trillion) with the king coin, Bitcoin climbing the charts by almost 135% at its peak.

Indian Authorities Crack Down on Six Crypto Exchanges on Suspicion of Tax Evasion

Up to six cryptocurrency exchanges have come under the spotlight of India’s Directorate General of Goods and Services Tax Intelligence (DGGI) on the suspicion of tax evasion.

According to sources privy to the investigations, the DGGI is looking into the operations of some of the country’s biggest crypto service providers, including BTC and ETH trading exchanges like Coinswitch Kuber, BuyUCoin, CoinDCX, and UnoCoin.

The sources also revealed that the crackdown on the crypto traders has so far uncovered tax evasion to the tune of about Rs 70 crore, which is equivalent to $6.2 million.

WazirX First to be Investigated

Late last year, the Central Goods and Services Tax (CGST) Mumbai Zone, revealed in a tweet that its officers had detected massive Goods and Services Tax (GST) evasion perpetrated by one of India’s premier crypto service providers, WazirX.

In the tweet, CGST revealed that it had recovered Rs 49.2 crore, which is about $4.3 million, in cash, as GST, interest, and penalties, from Zanmai Labs, the parent company of WazirX

Authorities also stated that WazirX, which records almost $43B in trading volume annually, had also launched its own digital currency, the WRX, which can be used alongside the Rupee to carry out transactions on the platform but had failed to pay any GST on it.

WazirX collects commissions on every crypto transaction on its platform from both the buyer and the seller. Transactions using WRX, attract a commission of 0.1%, while transactions carried out using the rupee attract a commission of 0.2%.

However, DGGI investigators claim that the platform only paid out GST on commissions earned from rupee transactions but not from WRX transactions. Both the rupee and WRX transactions attract a GST of 18%.

But reacting to the raid on their offices, a representative of Zanmai Labs blamed India’s ambiguous tax regime for the ensuing confusion.

In a press release, the crypto exchange said:

We voluntarily paid additional GST in order to be cooperative and compliant. There was and is no intention to evade tax. That being said, we strongly believe that regulatory clarity is the need of the hour for the Indian crypto industry.

DGGI Warns of Further Action Against Crypto Service Providers

Chainanalysis’ Global Crypto Adoption Index puts India second in a list of 154 countries where crypto use is most prevalent, and the DGGI has hinted that it is not done with investigations into India’s booming crypto space, alluding that more raids were in the offing. Officials say that future crackdowns will include Non-Fungible Token (NFT) platforms and coin launches.

Speaking to the ANI news agency, a DGGI official said:

They are providing facilitation intermediary services for buying and selling of crypto coins. These services attract a GST rate of duty of 18% which all of them have been evading.

Binance Could be Pursuing France as Its Headquarters

After a year of heavy regulatory scrutiny by regulators, the world’s largest cryptocurrency exchange, Binance, could be on the hunt for new headquarters in France. They are financing a $113 million (100 million euro) initiative together with France Fintech to support the blockchain and cryptocurrency sector in France.

The initiative called Objective Moon was announced in early November. Binance will create a development and research office in France, while nurturing start-ups and training programs.

Another French crypto hardware firm in France called Ledger and edtech company OpenClassrooms are involved in Objective Moon, developing educational programs. The growing fintech scene in France has proved a fertile ground for the initiative. Additionally, the fintech investments in the country have grown exponentially this year according to data from Dealroom, there have been great fundings for Qonto and Lydia.

Binance Considers Official Base Change

Binance has been on shaky ground all year, with regulators globally putting the exchange under intense scrutiny. Among them was an investigation by the U.S. Commodity Futures Trading Commission and a ban by Britain’s Financial Conduct Authority. The exchange also closed its trading platform in Singapore, further halting all trade of its digital stock tokens.

The CEO Changpeng Zhao has talked about their willingness to cooperate with regulators. Although they have roots in China, they are looking to explore other regions while leaning into decentralization associated with the crypto industry. The CEO has expressed interest in France as an official base of operations.

Binance French GM, David Princay told CNBC, ”the aim of Objective Moon is really to develop an ecosystem and to nurture and accelerate an ecosystem. You cannot do it alone. We need to be also able to capture the talent and to have more capabilities to grow bigger.” He added that opening and having an R&D office is one of the steps that they need for their next evolution.

Working with France Regulators

Binance’s move into France has been met by the watchful eye of the central bank. The governor of the Central Bank of France has said that if Binance is to set up operations in the country, they must have strong anti-money laundering checks in place. Princay said that they are ready to undergo evaluation and auditing, to be a sign of trust to the country’s regulators if they pass. He added that they have ongoing discussions with the regulators on licensing.

The EU’s Markets in Crypto Assets (MiCA) regulation, approved by the European Council recently, is the next big challenge for Binance. The EU aims to expand the licensing and passporting for crypto firms in the bloc and introduce greater investor protection.