After Terra, Luna crashes, regulators count cost of crypto

After Terra, Luna crashes, regulators count cost of crypto

Spectacular collapse of stablecoin puts focus on regulatory frameworks in South Korea and Singapore.

Taipei, Taiwan – As the crypto winter deepened this month, one wealth-destroying event – the collapse of the TerraUSD (UST) and Luna coins – has brought the human cost of unstable cryptocurrency projects to the surface.

UST, a so-called “algorithmic stablecoin,” plummeted over the last week as it lost its peg against the US dollar and sent its sistercoin Luna crashing to zero, erasing about $45bn. The crash wiped out the savings of untold numbers of investors overnight.

“I felt my heart sink watching Luna go into that downward spiral,” Hank Kennedy, a factory worker in Chicago, told Al Jazeera. “It (the crash) has had a huge impact on my life.

“Now I’m behind on all my bills, and I’ve lost $40,000, which was everything I had in my savings,” Kennedy added. “I was actually thinking that I would be able to make enough money to pay my home off, but instead, I’ve lost everything.”

The incident epitomises regulators’ nightmare scenario of crypto projects going wrong and prompted US Treasury Secretary Janet Yellen to call for regulation of stablecoins – whose selling point is their supposed stability due to being pegged to another currency or commodity – by year’s end. Former lawyers at the Securities and Exchange Commission (SEC) say the agency is probably already investigating the case.

In Asia, regulators may also have impetus to act.

Do Kwon, the creator of the cryptos, is a South Korean national, while Terraform Labs and the Luna Foundation Guard, the organisations that support the digital coins, are both registered in Singapore.

South Korean authorities launched an “emergency investigation” into the case this week. Investors in Singapore have filed police reports, although authorities have yet to make any move.

Kwon wrote on Twitter last week that he was “heartbroken” about the pain his invention had brought investors and that neither he nor the companies associated with the project had sold UST or Luna to profit from the crash. The statements came after the founder earlier that day proposed a “revival plan” to restart the network and distribute ownership of the project via one billion new tokens issued to holders of the collapsed currency. Kwon and the Luna Foundation Guard did not respond to requests for comment before publication.

The crash comes amid a rethink of the city state’s regulatory approach to digital assets as it tries to position itself as a responsible crypto hub. Singapore’s response could set a precedent as the social and economic costs of poorly managed projects come into sharper focus.

Singapore
Singapore is trying to position itself as a responsible crypto hub [File: Ore Huiying/Bloomberg]

“The government of Singapore is not going to be impressed that a firm registered in its country, with no real material ties to the city-state, has caused such damage to investors around the world,” Sam Reynolds, a Taipei-based crypto analyst at CoinDesk, told Al Jazeera.

“This is likely to lead to a further tightening of rules surrounding crypto firms registered in Singapore for jurisdictional preference yet conducting business primarily abroad,” he added.

Singapore’s parliament had already passed a law last month to increase oversight of firms like Luna that are domestically registered crypto companies but mainly operate abroad.

Under its Payments Services Act 2019, entities that offer payment instruments, such as algorithmic stablecoins, require a Digital Payment Token Services (DPTS) licence. Though Singapore has only issued a DPTS licence to a handful of firms, it has granted many more companies temporary exemptions from the law.

Yet when billions went up in smoke up this month, Kwon’s organizations had neither a DPTS licence nor an official exemption, according to Singapore’s Financial Institutions Directory.

Its failure to register is the first of three interrelated factors that lay compelling grounds for legal intervention by the city-state, according to Anndy Lian, a Singaporean crypto thought leader and author of Blockchain Revolution 2030.

“The second (factor) is this was a stablecoin,” Lian said, noting that since it was advertised as having parity with the US dollar and boasted 20 percent yields, it appealed to investors looking to stake their savings over time. This differentiates it from other cryptocurrencies whose price floats freely and are conducive to speculative trading.

“That means many retail investors got hurt on the pretext they had bought into the project because it is a stablecoin,” said Lian.

“From a Singaporean perspective, if you are a retail investor and you feel that you have been a victim of fraud, and have lost a certain amount of dollars on paper even though you held your investment and did not sell … that is a possible lawsuit Singaporeans can pursue or the government can pursue,” he said.

Cooperation with foreign regulators

The third reason is Kwon’s planned “fork” – the closing of the original network and launching a substitute – which has been put forth to revive the currency. Lian said such a move would  “dilute all the shareholders” and redistribute the tokens in a way that is likely to be highly inequitable.

“I think the Singaporean government will surely take some action after the fork is attempted,” he said.

South Korea’s Financial Supervisory Service (FSS) said this week that increased cooperation with foreign authorities is needed to regulate crypto after the Luna crash.

Lian believes Singapore may coordinate with foreign regulators on the case, too.

“Because this is a global event, there might be a common interest for the US and Singapore to work together on this case,” he said.

Lian said any action should not set the wrong precedent by insulating crypto investors from all losses.

“It would be misleading if investors believed they can claim losses from all altcoins. This was different since this was a stablecoin. We need to make that demarcation very clear,” he said.

“I think more regulatory clarity would need to be established before crypto-specific cooperation with countries could happen,” Reynolds said, referring to the continuing lawsuit between Terraform Labs and the SEC that seeks to establish if the financial watchdog has jurisdiction over the project.

Even if the company were found liable, it is unclear whether it has the assets to repay investors.

“The question would be, what assets would Terraform Labs and the Luna Foundation Guard have to repay investors?” Reynolds said.

“The Luna Foundation Guard, with its current balance sheet, could only pay out pennies on the dollar. And aside from those balances, it is unlikely that Terraform Labs has material assets sufficient to pay out any claims against it in a meaningful way,” he added.

“Before this happens, we would also need a determination if the collapse happened because of fraud, negligence, a coordinated attack, or market rejection of the platform. Right now, that’s not clear.”

Do Kwon
Terraform Labs founder Do Kwon is a South Korean national who registered his company in Singapore [File: Woohae Cho/Bloomberg]

Lian said regulators will look for a strong expression of shared grievances to justify moving forward with a case in Singapore.

In recent days, an online community in South Korea named “Victims of Terra-Luna coin” has been formed for this purpose.

Kennedy, the US worker who lost his funds, said he would readily join a class action lawsuit against Kwon.

“(This is) the reason why people like me try to talk with him on Twitter every day … to get some type of answers,” he said.

As regulators mull over their next move, the saga has offered industry players a moment of pause to reflect on what constitutes good governance and sound investing.

“It will take time to get the trust back,” Lian said, adding the case has spooked institutional investors in Singapore.

“I think we need to rethink what decentralisation means. What will happen next with Luna will not be based on any consensus formed among its community.”

Reynolds said investors should do their research and ensure they have diversified their assets.

“On paper, algorithmic stablecoins were a good idea but the industry is coming dangerously close to a ‘2008 moment’ as a result of one project’s outsized ambition,” he said. “The VCs that backed Terra need to have a serious think about how we got to this moment.”

SOURCE: AL JAZEERA

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

j j j

After 30% rally in 24 hours, can Shiba Inu offer more upside?

After 30% rally in 24 hours, can Shiba Inu offer more upside?

New Delhi: Meme token Shiba Inu was in the spotlight on Wednesday as the token zoomed over 31 per cent in the last 24 hours.

The popular meme coin listed on the trading platform Robinhood apart from Solana, Polygon and Compound. With this, investors can now access 11 cryptos on its platform, including Bitcoin, Ethereum and Dogecoin.

Among the newly listed tokens, Shiba Inu was the most abuzz as it rallied 31 per cent to $0.00002977 from $0.00002272 within 24 hours. However, the token is still 65 per cent below its all-time peak of $0.00008 hit in October 2021.

Volumes of Shiba Inu also witnessed a spectacular jump of 475 per cent as SHIB tokens worth more than $4.36 billion exchanged hands in the last 24 hours.

Ishan Arora, Partner, Tykhe Block Ventures said the Shiba Inu will attract ample eyeballs as it has listed on Robinhood, the largest retail stock trading app.

The users can quickly buy Shiba Inu with just a click without worrying about exchanges or wallets.

The 15th largest crypto token was commanding a market cap close to $16 billion with a total of 549,063.28 billion SHIB tokens in supply, the data from Coinmarketcap suggested.

Anndy Lian, Chairman, BigONE exchange said buzz among retail investors for Shiba Inu is more compared with other coins that got listed on Robinhood at the same time.

Analysts at BigONE still see an upswing of 20-80 per cent gain from the current position. The analysis was released a few days before the Robinhood announcement.

“This spike in price could also help other promising meme coins such as Floki Inu, Kishu Inu, Babydoge or the newer ones on Cronos chain such as Croki gain more traction,” he added.

The spike in Shiba Inu also extended to other tokens. Baby Shiba Inu, Dogey Inu, Banano, SafeMoon Inu, BitShiba, Shiba Girlfriend and Flok Inu rose up to 22 per cent.

However, meme tokens are highly volatile in nature and lack sound fundamental value. Experts suggest that investors should not blindly punt on such joke coins, which are prone to become junk coins.

Arora suggests that investors need to be extra cautious with their investment in the meme tokens, especially in the current volatile market conditions.

Shiba Inu investors are hopeful about SHIB token price reaching 1 cent in 2022. However, SHIB will have to increase 403 times to reach that level this year. In the year 2021, Shiba Inu had risen 60 times in a span of six months.

There has been news of Ethereum whales purchasing Shiba Inu tokens in bulk. If the ETH whales are shifting to Shiba Inu, it is evidence of increasing trust for the Shiba Inu ecosystem. However, the buying from whales could not be verified.

 

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

j j j

Crypto community high on hopes after positive signals from India, Russia govts

Crypto community high on hopes after positive signals from India, Russia govts
My Additional comments:
1. After the initial green signals from India and Russia, what is next for Crypto Industry?
With the green lights from India and Russia, we are seeing an increase in Bitcoin’s spot volume in the last 24 hours on BigONE Exchange. The pricing of BTC has also increased by more than 2.5%. A huge country like Russia that embraces crypto is positive news for the whole world. We have seen more retail investors in the communities starting to feel comfortable and bullish. This is especially so in the meme coins’ communities. Still, I want to caution all that the bullish shift could be short term as it still appears negative in the charts for the longer term. With India and Russia taking their stand on crypto, I will do many other countries taking reference from them and following their footsteps. Some of the other countries that I am giving advice on are also more receptive after two big countries accepted cryptocurrencies.
2. Do you think that different regulations around the globe will help the industry or the world should come as one?
The world would not and should not come as one as it is not feasible for most nations. Cryptocurrencies are seen as bridges between worlds and the new regulations in place will serve as a financial connector between countries. This could also mean that cryptocurrencies would be further scrutinized, monitored and monitored. Those who see decentralisation as removing control and governance will not be happy with regulations. While those who really want crypto to grow will see the acceptance by the regulators as a sign of further disruptions.
3. What would be the key concerns of industry, post regulations?
There will be a lot of changes post regulations. We will see the real issues when the countries start to implement and allow crypto into their system fully. I hope the other countries can use Singapore’s sandbox model for instance to simulate the possible scenarios before going into full-scale implementation. There should be awareness programs in the country to tell new users what is crypto, the ups and downsides of investing in crypto and other taxations issues too. The education process will empower users to make better decisions, hence fewer headaches for the regulators.

Crypto community high on hopes after positive signals from India, Russia govts

Synopsis

Crypto industry at large is positive on the announcement and believes that the governments across the world are stepping ahead to take a big awaited call in the digital assets

After Russia’s intentions to regulate crypto, players in India and across the globe are high on hopes over the new-age asset class.

They are expecting that two major nations – India and Russia – have stepped ahead for the legitimisation of the crypto assets, and more major economies may join the forces soon.

However, India has made it clear that the legitimate or illegitimate are separate questions and the government is simply taxing the gains from the crypto transactions, which is its sovereign right.

On the other hand, the Putin government is eyeing crypto regulations, bucking the recommendation from its central bank to ban the mining and trading of the private digital tokens.

Crypto industry at large is positive on the announcement and believes that the governments across the world are stepping ahead to take a big awaited call in the digital assets.

Anndy Lian, Chairman, BigONE Exchange said that a country like Russia embracing crypto is positive news for the whole world. More retail investors in the communities are starting to feel comfortable and bullish, especially on memecoins.

“With India and Russia taking their stand on crypto, many other countries may take reference from them and follow in their footsteps,” he added.

Sathvik Vishwanath, Co-Founder and CEO, of Unocoin said that it will be a matter of time before more and more countries start looking at the crypto industry in a positive way.

The ones who had shied away from cryptos in the past are changing their perspectives and Russia is one of them, he added. “On the other side India has taken the wait and watch policy, but is not opening up with its views.”

Crypto fanatics, who see decentralisation as removing control and governance, will not be happy with regulations put across by the authorities across the globe.

Dileep Seinberg, Founder and CEO, Thinkchain said that every nation is likely to have its own cryptocurrency, with a potential to build a crypto-economy globally.

However, the industry players do not believe that the world should join the force and come as one to regulate the crypto assets uniformly. They do not see this as a viable option.

Cryptocurrencies are seen as bridges between worlds and the new regulations in place will serve as a financial connector between countries, said the experts.

The world would not and should not come as one as it is not feasible for most nations, said Lian of BigONE. “This could also mean that cryptocurrencies would be further scrutinized, monitored and monitored.”

It would be an unrealistic home for specific guidelines to be applicable for the entire world as one. At the tech level there definitely is uniformity irrespective of which country it is working in.

“The taxation, regulations, and enforcement differ which needs to be handled by the governments within the country,” said,” Vishwanath of Unocoin.

Once the regulations are out in different parts of the world, there will be a lot of changes through. However, experts said that governments, authorities and regulators should primarily focus on education and awareness about the asset class.

“We will see the real issues when the countries start to implement and allow crypto into their system fully,” Lian said. “I hope the other countries can use Singapore’s sandbox model for instance to simulate the possible scenarios before going into full-scale implementation.”

“Most important industry concerns would not come from technology but to see if few companies can monopolies like any other industry in the world,” said Sienberg. “This might damage the very fabric of the decentralised crypto world.”

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

j j j