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Factbox: Singapore’s rise, and falter, as Asia cryptocurrency hub

Representations of the Ripple, Bitcoin, Etherum and Litecoin virtual currencies are seen on a PC motherboard in this illustration picture, February 14, 2018. REUTERS/Dado Ruvic

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HONG KONG/SINGAPORE, July 12 (Reuters) – Singapore’s burgeoning cryptocurrency sector has been shaken by the recent collapse of Three Arrows Capital, a cryptocurrency hedge fund, and signs of tighter scrutiny by regulators at the Monetary Authority of Singapore. read more

Following are key facts about the rise of Singapore as an Asian cryptocurrency hub, and the fallout from the Three Arrows collapse.

HOW IMPORTANT IS SINGAPORE TO ASIA’S CRYPTO SECTOR?

Investment in Singapore’s crypto and blockchain companies surged to $1.48 billion in 2021, according to KPMG, ten times the previous year and nearly half the Asia Pacific total for 2021.

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PwC says 6% of the world’s crypto funds are based in Singapore, ranking it a joint third globally – along with Switzerland and Hong Kong – behind the U.S. and UK.

Singapore, one of Asia’s main investment banking and asset management centres alongside Hong Kong, is keen to establish a leading role in financial technology, including blockchain and crypto.

WHY HAS SINGAPORE ATTRACTED CRYPTO BUSINESS?

The scale and range of Singapore’s crypto companies and service providers attracted digital asset companies fleeing regulatory crackdowns elsewhere.

These include Huobi, a crypto exchange initially focused on China that now has a major presence in Singapore.

U.S. firms like crypto exchange Gemini have set up regional Asia headquarters in Singapore.

The citystate was also a forerunner in developing a licencing regime for crypto companies, which attracted many companies hoping the endorsement of a leading regulator would help them to win business.

Other industry leaders such as crypto exchange Coinbase (COIN.O) have applied for licences in Singapore.

DBS (DBSM.SI), Singapore’s largest bank, has launched its own crypto exchange.

WHY DID 3AC COLLAPSE?

Digital currencies have been on the backfoot for months, with Bitcoin losing roughly half its value since the start of May.

The sell-off was triggered by the collapse of stablecoin TerraUSD and its paired token Luna, resulting in large losses for holders such as 3AC. The company lost about $200 million of its investment in Luna, an executive told the Wall Street Journal last month, adding that the company was still trying to quantify its losses.

According to U.S. court filings, several of 3AC’s lenders have issued it notices of default.

WHAT IS SINGAPORE’S REGULATORY STANCE?

The Monetary Authority of Singapore’s statements have indicated a welcoming approach, encouraging crypto-related services.

At the same time, some companies say the authorities’ soothing rhetoric belies an occasionally harsh regulatory stance.

Only a handful of approvals have been granted so far among well over 100 applicants for new crypto payments licences.

Chia Hock Lai, co-chairman, Blockchain Association Singapore, said there were currently well over 200 crypto businesses in Singapore, but several had shut down or moved out after the licencing regime came in.

The most high-profile of these is Binance, the world’s largest crypto exchange, which left Singapore last year as it came under close scrutiny around the world. read more

Like regulators elsewhere, MAS has also indicated that it would take a tough stance on money laundering, consumer protection, and other risks that may be associated with the digital currency sector.

Tharman Shanmugaratnam, Senior Minister and chairman of the MAS, told parliament last week that the regulator was considering additional consumer safeguards for cryptocurrency trading, although he did not mention 3AC.

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Reporting by Alun John and Chen Lin; Editing by Edmund Klamann

Our Standards: The Thomson Reuters Trust Principles.


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N.Korea may be behind new $100 mln cryptocurrency hack, experts say

Representation of cryptocurrency bitcoin is seen in this illustration taken November 29, 2021. REUTERS/Dado Ruvic/Illustration/File Photo

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SEOUL, June 30 (Reuters) – North Korean hackers are most likely behind an attack last week that stole as much as $100 million in cryptocurrency from a U.S. company, three digital investigative firms have concluded.

The cryptoassets were stolen on June 23 from Horizon Bridge, a service operated by the Harmony blockchain that allows assets to be transferred to other blockchains.

Since then, activity by the hackers suggests they may be linked to North Korea, which experts say is among the most prolific cyber attackers. U.N. sanctions monitors says Pyongyang uses the stolen funds to support its nuclear and missile programmes.

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The style of attack and high velocity of structured payments to a mixer – used to obscure the origin of funds – is similar to previous attacks that were attributed to North Korea-linked actors, Chainalysis, a blockchain firm working with Harmony to investigate the attack, said on Twitter on Tuesday.

That conclusion was echoed by other investigators.

“Preliminarily this looks like a North Korean hack based on transaction behaviour,” said Nick Carlsen, a former FBI analyst who now investigates North Korea’s cryptocurrency heists for TRM Labs, a U.S.-based firm.

There are strong indications that North Korea’s Lazarus Group may be responsible for this theft, based on the nature of the hack and the subsequent laundering of the stolen funds, another firm, Elliptic, said in a report on Thursday.

“The thief is attempting to break the transaction trail back to the original theft,” the report said. “This makes it easier to cash out the funds at an exchange.”

If confirmed, the attack would be the eighth exploit this year – totalling $1 billion in stolen funds – that could be attributed to North Korea with confidence, accounting for 60% of total funds stolen in 2022, Chainalysis said.

North Korea’s ability to cash in on its stolen assets may have been complicated by the recent drop in cryptocurrency values, experts and South Korean officials told Reuters, possibly threatening a key source of funding for the sanctions-strapped country. read more

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Reporting by Josh Smith

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Russian parliament approves tax break for issuers of digital assets

MOSCOW, June 28 (Reuters) – Russian lawmakers on Tuesday approved a draft law that would potentially exempt issuers of digital assets and cryptocurrencies from value-added tax.

Russia has long voiced scepticism of cryptocurrencies and other digital assets, with the central bank citing concerns over financial stability.

But in February the regulator gave blockchain platform Atomyze Russia the first licence to exchange digital assets. A licence for dominant lender Sberbank (SBER.MM) soon followed.

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Unprecedented Western sanctions have hit the heart of Russia’s financial system over events in Ukraine and lawmakers have scrabbled to bring in new legislation to soften the blow.

The draft law, approved by State Duma members in the second and third readings on Tuesday, envisages exemptions on value-added tax for issuers of digital assets and information systems operators involved in their issue.

It also establishes tax rates on income earned from the sale of digital assets.

The current rate on transactions is 20%, the same as for standard assets. Under the new law, the tax would be 13% for Russian companies and 15% for foreign ones.

The draft must still be reviewed by the upper house and signed by President Vladimir Putin to become law.

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Reporting by Reuters, Editing by Louise Heavens

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Explainer: Can crypto holders recoup losses in court?

June 24 (Reuters) – A downturn in cryptocurrency prices and crash of one stablecoin has led some investors to try to recover their losses in U.S. court. Here is how cryptocurrency litigation has fared so far and the challenges investors may face.

WHO IS BEING SUED?

Companies that created cryptocurrencies, exchanges that facilitated their sale, and individuals who promoted them have all been sued.

Kyle Roche, who represents cryptocurrency holders in several lawsuits, said U.S. claims over cryptocurrency often involve alleged violations of federal securities or commodities laws, which prohibit fraud and manipulation and require products and operators to be registered with U.S. authorities.

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The latest lawsuit took aim at Terraform Labs, the company behind Terra USD, over the stablecoin’s recent collapse.

A crytocurrency investor sued the Seoul-based company and its Chief Executive Do Kwon on June 17, alleging they failed to register the company’s digital assets as securities and worked with several venture capital funds that backed Terra USD to defraud investors.

A Terraform Labs spokesperson called the claims meritless.

Tether, which is behind the world’s largest stablecoin, has been accused of rigging cryptocurrency markets in a lawsuit in New York. And Ripple, whose founders created the token XRP, has been hit with a lawsuit in California, claiming it sold unregistered securities.

Both lawsuits have survived motions to dismiss.

A spokesperson said Ripple disputes the allegations and will defend against them. Tether did not respond to a request for comment.

Cryptocurrency exchanges have been another target for investors seeking to recoup losses.

Binance U.S. was sued on June 13 by investors claiming it falsely marketed TerraUSD as a safe asset ahead of its collapse. And in March, investors accused Coinbase of selling 79 digital assets as unregistered securities. read more

Binance and Coinbase have denied the allegations.

Investors are also suing celebrities who have publicly touted cryptocurrency. A lawsuit filed in Los Angeles claims Reality TV star Kim Kardashian and boxing legend Floyd Mayweather Jr. engaged in a cryptocurrency pump and dump. Representatives for Kardashian and Mayweather did not respond to requests for comment. read more

LEGAL HURDLES

A wave of lawsuits brought in 2020 against exchanges alleging they fueled an illegal boom in digital coins largely failed after judges found some of the claims were filed too late or had too little connection to the United States.

Timing should not be an issue for newer lawsuits, but cryptocurrency holders seeking to sue overseas companies in U.S. court could still face hurdles.

Token holders won a default judgment in New York against Singapore-based exchange KuCoin, but dropped the case after a Singaporean court would not make the company provide information to enforce the judgment.

KuCoin did not respond to a request for comment.

Another potential hurdle for investors filing claims under securities or commodities laws will be showing their tokens meet the legal definition of those assets. Some courts have ruled that certain cryptocurrencies fit the bill, but the issue remains unsettled.

Cryptocurrency holders may face additional obstacles when going after exchanges. In the Coinbase lawsuit, the exchange has argued that it was not a party to the transactions, and that private litigants cannot enforce registration requirements.

HAVE ANY CRYPTO HOLDERS WON MONEY IN COURT?

While many cryptocurrency lawsuits are pending, the SEC has reclaimed some funds for investors in a handful of digital assets through settlements.

But even after a settlement, investors may face long waits and still end up with less than they shelled out.

Last year, blockchain company Block.one agreed to pay $27.5 million to settle token holders’ lawsuit alleging it had violated securities law.

More than 100 token holders filed claims worth more than $75.7 million, according to court filings. The settlement has not yet received final approval.

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Reporting by Jody Godoy;
Editing by Noeleen Walder and Richard Chang

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Middle East-focused crypto firm BitOasis cuts jobs amid sector turmoil

Representation of cryptocurrency bitcoin is seen in this illustration taken November 29, 2021. REUTERS/Dado Ruvic

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DUBAI, June 19 (Reuters) – BitOasis, a Middle East-focused cryptocurrency exchange based in the United Arab Emirates, said on Sunday it laid off nine of its staff, the latest company in the sector to cut jobs in the face of a downturn and market turmoil.

The cryptocurrency market has been rocked by extreme volatility with crypto lender Celsius Network freezing withdrawals early last week as investors dumped risky assets on fears about aggressive Federal Reserve rate hikes to cool red hot inflation.

On Tuesday, cryptocurrency exchange Coinbase Global Inc (COIN.O) said it was slashing 1,000 jobs, or 10% of its workforce. read more

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BitOasis was founded in Dubai in 2015 and serves English and Arabic speaking customers in the Gulf.

“Earlier this week, nine employees were made redundant across offices in Dubai, Abu Dhabi and Amman,” its CEO and co-founder Ola Doudin said in an email.

A spokesperson for the company said this represented nearly 5% of the company’s workforce.

In 2021, BitOasis received permission to operate a Multilateral Trading Facility from the Abu Dhabi Global Market and is registered as a Virtual Asset Service Provider with the Financial Intelligence Unit of the UAE central bank.

BitOasis received provisional approval from Dubai’s Virtual Assets Regulatory Authority (VARA) in March 2022.

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Reporting by Saeed Azhar; Editing by Emelia Sithole-Matarise

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Bitcoin drops 6.9% to below $30,000

June 1 (Reuters) – Bitcoin, the world’s biggest and best-known cryptocurrency, dropped 6.9% to $29,555.35 at 22:03 GMT on Wednesday, losing $2,262.81 from its previous closing price.

It was down 38.9% from the year’s high of $48,234 on March 28.

Ether , the coin linked to the ethereum blockchain network, dropped 7.52% to $1,794.68, losing $145.87 from its previous close.

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Reporting by Shubhendu Deshmukh and Rachna Manojkumar Dhanrajani in Bengaluru

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Bitcoin surges nearly 8% to $31,780

May 30 (Reuters) – Bitcoin rose 7.93 % to $31,780.51 at 2200 GMT on Monday, up $2,334.8 from its previous close.

The world’s biggest and best-known cryptocurrency is up 25.1% from the year’s low of $25,401.05 on May 12.

Ether , the coin linked to the ethereum blockchain network, rose 9.8 % to $1,989.38 on Monday, adding $177.54 to its previous close.

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Reporting by Ann Maria Shibu in Bengaluru; Editing by David Gregorio

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India ready with consultation paper on cryptocurrencies – govt official

Representations of cryptocurrency Bitcoin, Ethereum and Dash plunge into water in this illustration taken, May 23, 2022. REUTERS/Dado Ruvic/Illustration

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NEW DELHI, May 30 (Reuters) – Inflation in India should moderate in coming months and the government is ready with its consultation paper on cryptocurrencies, economic affairs secretary Ajay Seth told reporters on the sidelines of an event on Monday.

Seth said there needed to be a global consensus reached on cryptocurrencies and India would look at regulations enforced in other countries before deciding how it would regulate.

In the annual budget this year the government said it would tax gains made through cryptocurrency investments at 30% but the country has still not given the measure legal status.

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Reporting by Aftab Ahmed; Editing by Bradley Perrett

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Russia mulls allowing cryptocurrency for international payments, Interfax reports

Representations of the Ripple, Bitcoin, Etherum and Litecoin virtual currencies are seen on a PC motherboard in this illustration picture, February 14, 2018. REUTERS/Dado Ruvic/Illustration

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May 27 (Reuters) – Russia is considering allowing cryptocurrency to be used for international payments, Interfax news agency quoted a government official as saying on Friday.

“The idea of using digital currencies in transactions for international settlements is being actively discussed,” Ivan Chebeskov, head of the finance ministry’s financial policy department, was quoted as saying.

Russian officials are wrestling with how to regulate the country’s crypto market and use of digital currencies, with the finance ministry opposed to the central bank’s calls for a blanket ban. read more

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Discussions have been ongoing for months and though the government expects cryptocurrencies to be legalised as a means of payment sooner or later, no consensus has yet been reached. read more

The finance ministry is discussing adding the latest proposal on international payments to an updated version of a draft law, the Vedomosti newspaper reported on Friday, citing government officials.

Allowing crypto as a means of settlement for international trade would help counter the impact of Western sanctions, which has seen Russia’s access to traditional cross-border payment mechanisms “limited,” Chebeskov said.

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India’s top crypto app CoinSwitch calls for regulatory ‘peace, certainty’

Souvenir tokens representing cryptocurrency Bitcoin plunge into water in this illustration taken May 17, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

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DAVOS, Switzerland, May 22 (Reuters) – India must establish rules on cryptocurrencies to resolve regulatory uncertainty, protect investors and boost its crypto sector, CoinSwitch CEO Ashish Singhal said on Sunday.

Although India’s central bank has backed a ban on cryptocurrencies over risks to financial stability, a federal government move to tax income from them has been interpreted by the industry as a sign of acceptance by New Delhi.

“Users don’t know what will happen with their holdings – is government going to ban, not ban, how is it going to be regulated?,” Singhal, a former Amazon engineer who co-founded CoinSwitch, told Reuters at the World Economic Forum in Davos.

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CoinSwitch, which is valued at $1.9 billion, says it is the largest crypto company in India with more than 18 million users. The firm, based in India’s main tech hub of Bengaluru, is backed by Andreessen Horowitz, Tiger Global and Coinbase Ventures.

“Regulations will bring peace … more certainty,” he added.

Blockchain and cryptocurrency companies have a large presence at this year’s Davos meeting, which coincides with a period of crypto prices plummeting around the world.

India’s central bank has voiced “serious concerns” around private cryptocurrencies, but Prime Minister Narendra Modi in December said such emerging technologies should be used to empower democracy, not undermine it. read more

Exchanges often struggle in India to partner with banks to allow transfer of funds and in April, CoinSwitch and some others disabled rupee deposits through a widely-used state-backed network, alarming investors. read more

‘CLARITY’

While moves on taxation and certain advertising regulation had brought some relief, a lot more needed to be done, Singhal said, adding that India should develop a set of laws.

These should include norms for identity verification and transferring crypto assets, while for exchanges, India should put in place a mechanism for them to track transactions and report them to any authority if need be.

While no official data is available on the size of India’s crypto market, CoinSwitch estimates the number of investors at up to 20 million, with total holdings of about $6 billion.

Regulatory uncertainty has been widely felt. In April, Coinbase, the largest cryptocurrency exchange in the United States, launched in India, but within days paused use of a state-backed inter-bank fund transfer service.

Coinbase CEO Brian Armstrong later said in May the move was triggered due to “informal pressure” from India’s central bank.

CoinSwitch too has paused so-called UPI transfers to hold talks with banking partners and make them comfortable, Singhal said in the interview. He added CoinSwitch was is in talks with regulators to try and restart the transfer service.

“We are pushing for regulations. With the right regulation, we can get the clarity,” he said.

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Reporting by Aditya Kalra in Davos; Editing by Alexander Smith

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