‘Hong Kong’s FTX’ victims win lawsuit, bankers bash stablecoins: Asia Express

Victims win first civil action against the FTX of Hong Kong

A Hong Kong court has ruled in favor of two investors who filed a civil suit against defunct Dubai-based cryptocurrency exchange JPEX and its affiliate, Web 3.0 Technical Support.

With the judge’s ruling, 1.85 million Hong Kong dollars (around $238,000) will be recovered on behalf of the plaintiffs.

“What this newest judgment [shows] is that victims of virtual currency-related cases do have judicial recourse and set a precedent for all those victims who are in similar positions longing to recover their cryptos, but might be at a loss as to what options they have other than waiting for results from criminal investigation,” Joshua Chu, co-chair of the Hong Kong Web3 Association and the lawyer representing the plaintiffs, tells Magazine.

“They can take their own steps and police will need victims to have a court order to vest frozen assets in any event,” he adds.

Chu said that victims of digital currency fraud in Hong Kong face challenges in recovering funds due to limited precedents and a lack of specialized legal expertise.

This difficulty is further compounded by the six-year statute of limitations for civil cases, which can give bad actors hope that they can simply wait out the deadline.

Chu and his clients are now seeking enforcement action to recover funds in police custody. Local authorities froze around $29 million related to the case in April.

The JPEX scandal first emerged in September 2023, when the Hong Kong Securities and Futures Commission (SFC) warned that the exchange was unlicensed.

This scandal has been likened to Hong Kong’s version of the FTX collapse due to its mismanagement, lack of transparency, big investor losses and high-profile endorsements.

It was a setback for the local industry, as withdrawal freezes and subsequent arrests occurred while the city’s government was holding regulatory discussions to position Hong Kong regional hub for digital assets.

The SFC has been highly cautious in issuing licenses, with only three exchanges having received approval to date.

Gemini’s continues APAC expansion with Singapore’s in-principle approval

Gemini has announced it received preliminary approval for Singapore’s Major Payment Institution license, which permits businesses to provide cross-border transfers and digital payment token services.

Currently, Singapore has 28 “digital payment token” businesses that have been issued the MPI license by the Monetary Authority of Singapore, the city-state’s central bank.

While the license permits business dealings, Gemini already set its Singapore office as its so-called APAC hub and its Indian office for engineering and operations.

The APAC region is expected to continue approving more crypto exchanges in the region, particularly in Hong Kong, Singapore’s regional rival.

Hong Kong has only issued three licenses so far but is expected to ramp up its approvals.

At the Hong Kong FinTech Week on Oct. 28, the city’s financial secretary, Paul Chan, said more licenses are expected to be issued “in the next couple of months.”

An increase in licensed crypto service providers offers Hong Kong investors more vetted platforms to trade on — a crucial lesson highlighted by the JPEX case.

Central banks’ gathering turns to stablecoin bashing

Reserve Bank of India Governor Shaktikanta Das criticized stablecoins while shilling central bank digital currencies (CBDCs) and their integration into the Unified Payments Interface, the Indian payment system that handles 500 million transactions each day.

“I have actually very strong reservations on these stablecoins and all that,” Das said at the G30 39th Annual International Banking Seminar.

Das took part in a panel discussion with Bank of International Settlements General Manager Agustín Carstens and Bank of England Governor Andrew Bailey, with the three taking turns to question the purpose of stablecoins and claiming they are not able to be stable. 

“Money, fiat currency, has to be issued by the central bank on behalf of the sovereign. Stablecoin is private money. The bigger question is, are we comfortable allowing private money to dominate the payment system, or are we comfortable in having the central bank currency that is the fiat money to dominate the entire ecosystem related to transactions and payments?” Das said.

Das then admitted that he is “very uncomfortable” with stablecoins and private sector money, stating he sees no benefits to them.

Last week, local media cited anonymous insiders to report that India is considering banning private sector currencies, like Bitcoin and Ethereum. One of the insiders reportedly stated that CBDCs can do whatever cryptocurrencies can do while providing additional benefits.

The RBI has previously attempted to limit cryptocurrencies in the nations by prohibiting local banks from servicing the sector, but the ban was later reversed by the nation’s supreme court.

Das said that the central bank is not in a “great hurry” to announce a nationwide rollout.

India’s digital rupee pilot was launched in late 2022 and the RBI has been testing various use cases, such as offline payments and programmability. It has 5 million users.

China, whose CBDC was among the earliest to start developing among major economies, has been testing its digital currency in select regions since April 2020

Crypto scammers busted after using stolen funds to buy luxury condo

Thai authorities have busted an international group of scammers who purchased a luxury Bangkok condominium after defrauding a local woman of 21 million baht ($620,000), according to local media.

Five suspects have been detained.

The victim, a local investor referred to as “Ms. Mallika” was lured by a Facebook page that promoted stocks and crypto investments. 

After engaging with scammers, she was lured into communicating on LINE messenger where she was manipulated into making incremental crypto transfers under the guise of growing her investment portfolio.

Investigators found that the gang operated with defined roles. Cambodian national “Mr. Moon” and Myanmar national “Mr. Ko” coordinated fund transfers for a Burmese broker, who routed the money through various accounts. 

The funds were eventually transferred to “Ms. San” and “Ms. Thuay,” both from Myanmar. They used the illicit proceeds to purchase a high-end condo in Bangkok’s Rama 9 district, which has been developing as a business hub in the capital city.

Authorities reportedly believe the property was intended to be flipped instantly.