In a recent controversy brought to light by Amber AI, Hong Kong-based cryptocurrency exchange OKEx has been allegedly engaging in “market manipulation and fraud,” impacting $400 million in trades. Investors are unable to seek help from the courts due to regulatory exclusions.

An Achilles Heel for Investors

Despite Hong Kong having been among the first hubs to publicly endorse both blockchain and fintech, cryptocurrencies have remained a thorn in the side of Beijing’s financial regulators. At the moment, there is very little incentive to impose an outright ban on crypto trading or exchange in the city, unlike in Mainland China. That said, the Securities and Futures Commission (SFC) in Hong Kong has not worked to make the atmosphere towards crypto more favorable, either.

Why Major Crypto Exchange OKEx Controversially Used User Funds to Liquidate Bitcoin Contract
Related: Why Major Crypto Exchange OKEx Controversially Used User Funds to Liquidate Bitcoin Contract

 

 

 

 

 

 

Back in October 2018, the SFC proposed a “sandbox” approach for crypto exchanges. According to the South China Morning Post, the proposal introduced Nov. 1, enabled exchanges to apply for licensure in Hong Kong.

While the move was widely regarded as a step forward for the industry in China (and the industry overall), many failed to notice a key point in the announcement: The new approach would not accept platform operators trading digital assets, such as futures, derivatives, and other contracts.

These exceptions stripped investors of the ability to seek the SFC’s help in the case of fraud or manipulation, leaving investors vulnerable.

Investors Left Without Recourse

On Nov. 26, the South China Morning Post said that the Seychelles-registered exchange was under fire last week after three of its future settlements for Bitcoin Cash were delivered earlier than scheduled. These contracts affected trades worth more than $400 million.

Several investors endured heavy losses as a result, turning to the law in hopes of a fair inquiry into the incident. The solicitations to the courts received no responses, with judges pointing to the recent dictum of the exclusion of derivatives and futures.

It seems that in cases of derivatives and futures, fund managers and traders need to carefully weigh their options and assess the risks themselves, as any remuneration from the courts seems unlikely.

Potential Fraud

In more troubling news, Amber AI, an algorithmic trading firm, claims that these trades were not simply a mistake.

In a Medium post, the firm claims that OKEx was trading against its clients’ positions in the futures markets and profiting at their expense. Amber AI claims that the incident borders on fraud.

The exchange denied all such claims in a detailed blog post.

This is not the first time OKEx has caused losses for its customers. Back in July of 2018, the exchange took a portion of the gains from all of its traders in a clawback mechanism used to plug clients’ margin call losses.

The exchange endured the significant backlash from the community, even though it may have been within their contractual rights to cause these losses.

In all, OKEx has been in the news for the wrong reasons. However, without the pressure of a regulatory agency, there is little customers can do to dispute losses caused by OKEx. In this regulatory environment, the best traders can do is remain vigilant and avoid these unregulated securities, and if these practices continue, vote with their dollars and trade somewhere else.

This post credited to cryptoslate  Image source: Cryptoslate

Modern Terminals, the second largest container terminal operator in Hong Kong, has joined the TradeLens project, a blockchain-enabled technological solution developed by Maersk and IBM.

The TradeLens ecosystem – writes Modern Terminals in its press release – seeks to digitize and streamline processes in the global supply chain to deliver higher efficiency and lower cost. It includes more than 20 port operators and terminals around the globe, factoring circa 234 docks on five continents, including Port of Valencia, PSA Singapore, Patrick Terminals, Port of Halifax, Port of Bilbao, PortBase, PortConnect and the Port of Philadelphia.

Wider Economic Saving

The inefficiencies in the traditional supply chain have incurred losses worth billions of dollars in the past decade, Liaison found.

Before TradeLens, a majority of the ports as mentioned above were working principally with paper records, open to damages, manipulation, and outright lostness. Container ships still carry documents for immediate verification that obstructed the flow of their supply chain, eventually causing shipment delays and errors via manual filing.

“It does not seem like much, but it is,” Peter Levesque, Group Managing Director of Modern Terminals, toldSCMP. “Without blockchain, you’re going on faith that what’s on the document is what’s in the container.”

The TradeLens solution claims that their trial run reduced the shipment time by 40 percent, leading to an overall economic saving for the supply chain participants. The use of digital ledger has enabled the participants to broadcast the status of a container in a supply chain in real-time, such that records become immutable and available at the same time.

“The potential from offering a neutral, open digital platform for safe and easy ways of exchanging information is huge, and all players across the supply chain stand to benefit,” Maersk’s chief commercial officer Vincent Clerc had stated in January.

Trial Runs

Modern Terminals also joins the TradeLens group of ports as a Network Member to evaluate the same: the platform’s performance in the real-time. Based on the outcomes, each port would offer its suggestions about whether TradeLens could be improved any further.

“This initiative will generate tremendous savings for our industry over time while enhancing global supply chain security,” said Levesque. “That is the Holy Grail – one place to see the whole [supply chain] in one spot.”

Maersk and IBM are not the only companies that are tapping blockchain to improve supply chain management. Crimson Logic, a Singapore-based company, is also developing a blockchain solution called Global eTrade Services to do pretty much the same thing TradeLens is doing.

This post credited to ccn Featured image from Shutterstock.

On November 16, the Hong Kong-based blockchain startup Crypto.com announced that it is planning to issue its prepaid card, MCO Visa Card, in the United States. The company says the card has been approved for launch in partnership with its local bank partner Metropolitan Commercial Bank. Its metal cards promise up to two percent token rewards with its native MCO token, airport lounge access (select cards), tap-and-pay functionality, as well as competitive interbank rates.

Convert crypto to fiat with a few taps

According to Crypto.com, users of the MCO Visa Card can easily convert their crypto to fiat using the mobile wallet to be spent at over 40 million locations worldwide, online and offline. However, the company highlights that users need to exchange crypto to fiat currency first via Crypto.com’s Wallet before transacting.

The company began shipping cards to Singapore users in October, and says it currently has reservations for over 100,000 cards.

The blockchain startup says that the cards come with no annual or monthly fees, and no-fee ATM withdrawals.

The company’s official announcement quotes Mark DeFazio, President and CEO of Metropolitan Commercial Bank, who said that they are pleased to work closely with Crypto.com, as “the MCO Visa card is quite unique and provides a bridge between the traditional banking and cryptocurrencies in a safe and compliant way.”

Card reservations are made through a Crypto.com’s Card & Wallet App available for iOS and Android users.

More than a card

Crypto.com believes their product range will be useful for both crypto newcomers and experienced users. In addition to the MCO Visa Card, the company has created products that are geared towards making cryptocurrency more accessible to a broader group of customers.

Crypto.com’s Wallet is designed to securely buy, sell, send, store, and track a range of cryptocurrencies including Bitcoin, Ether, XRP, Litecoin, Binance Coin, and its own MCO Token. Crypto Invest is a tool to help democratize quant trading. Crypto Credit, which is not yet released, will allow customers to “spend crypto without selling.”

Crypto.com assures, that their App is easier to use than some other platforms. For example, buying cryptocurrency requires only a few taps compared to the complex process of other wallets, the company says. With Crypto.com’s Track Coin feature, users can track coins, compare exchange rates and prices, and sort coins by capitalization, performance, and volume.

Crypto.com Co-Founder and CEO Kris Marszalek said, “Our vision is to put cryptocurrency into every wallet, and the upcoming card roll out in the United States is a huge step in that direction. Our products are beautifully designed to connect the fiat and crypto worlds and drive mass market adoption.

About the project

The company was founded in July 2016. Crypto.com was formerly known as Monaco until its rebrand to Crypto.com in July 2018. The founders had raised $26.7 million during their token sale in June 2017. Crypto.com is headquartered in Hong Kong.

This post credited to cointelegraph Image source: Cointelegraph

Major Hong Kong-based cryptocurrency exchange OKEx will delist over 50 trading pairs with weak performance, according to an announcement published Oct. 25.

As per the announcement, at 6:00 am Oct. 31, 2018 CET, the exchange will halt the trading of a swathe of pairs that they cite as having weak liquidity and trading volume. The exchange warned users that they should cancel their orders of the affected pairs from the platform.

OKEx also made a point of noting that it will delist only the indicated trading pairs, but not the tokens themselves.

Andy Cheung, Head of Operations at OKEx, called the move “housekeeping” in a tweet today, Oct. 27, saying about OKEx and other top exchanges: “As leaders, we are responsible for promoting a robust ecosystem […] We need to take action on those underperforming tokens now.”

In a tweet announcing the delisting yesterday, Cheung also noted:

“Getting listed is not final. Maintaining a good performance is the key to success.”

Earlier this month, OKEx announced the listings of four stablecoins at once – TrueUSD (TUSD), USD Coin (USDC), Gemini Dollar (GUSD), and Paxos Standard Token (PAX).

Founded in 2014, OKEx is at press time the world’s largest cryptocurrency exchange in terms of adjusted trading volume, seeing around $402.5 million in trades over the past 24 hours.

This post credited to Cointelegraph  Image source: Cointelegraph 

Hong Kong’s securities regulator issued a statement setting out guidelines for funds dealing with cryptocurrency Thursday, Nov. 1, saying it could move to formally regulate exchanges.

In what it called “guidance on regulatory standards,” the autonomous Chineseterritory’s Securities and Futures Commission (SFC) set in motion a series of steps that chief Ashley Alder hinted would culminate in a formal regulatory environment.

Hong Kong differs significantly in its approach to cryptocurrency from mainland China, with cryptoasset exchange and related activities legal, though formal regulation is pending.

“The market for virtual assets is still very young and trading rules may not be transparent and fair,” Bloomberg quoted Alder as saying during a fintech forum Thursday:

“Outages are not uncommon as is market manipulation and abuse. And there are also, I am afraid, outright scandals and frauds.”

The latest proposals pertain to any fund managers investing more than 10 percent of their holdings in cryptocurrency, with entities serving exclusively professional traders able to join a sandbox scheme designed to give more room to develop new products and services.

For others, a licensing process will require entities to inform the SFC about their business practices.

The statement reads:

“In order to afford better protection to investors, the SFC considers that all licensed portfolio managers intending to invest in virtual assets should observe essentially the same regulatory requirements even if the portfolios (or portions of portfolios) under their management invest solely or partially in virtual assets, irrespective of whether these virtual assets amount to ‘securities’ or ‘futures contracts.’”

Cryptocurrency exchanges could also fall under the the SFC’s supervision more directly in future.

“…It is proposed that the standards of conduct regulation for virtual asset trading platform operators should be comparable to those applicable to existing licensed providers of automated trading services,” it adds.

Hong Kong’s sharpening of its regulatory oversight comes while more and more jurisdictions move to do the same, as Bitcoin and major altcoin markets stabilizeand a general acceptance of their longevity begins to crystalize.

Last week, Taiwan announced it would release dedicated rules governing Initial Coin Offerings (ICOs) by June next year, having previously chosen not to regulate the sector.

 

This post credited to Cointelegraph  Image source: Cointelegraph

The founders of a $1.45 billion investment firm and a dedicated blockchain fund are teaming up to launch a new cryptocurrency whose value would be pegged to the yen.

South China Morning Post reports that Grandshores Technology Group, a Hong Kong-based blockchain investment firm, is raising HK$100 million (US$12.7 million) to bootstrap the project, which aims to provide traders and other cryptocurrency users with a yen “stablecoin,” whose value would be immune to price volatility in the wider cryptocurrency markets.

Grandshores Technology’s founding partner, Yongjie Yao, is also a founder of $1.45 billion investment firm Hangzhou Grandshores Fund, which has received backing from the Hangzhou government. He said that the fund’s partners are working with a Japanese bank to create the as-yet-unnamed stablecoin, which should launch in late 2018 or early 2019.

“We believe cryptocurrency traders and exchanges will be potential takers of these stablecoin,” he said, adding that Grandshores aims to develop an entire suite of fiat-pegged stablecoins, beginning next with the Hong Kong dollar and Australian dollar.

Notably, Grandshores Technology said that yen-pegged token’s financing round will be denominated in tether (USDT), the controversial USD-backed stablecoin that serves as a proxy for physical greenbacks on many cryptocurrency exchanges.

Speaking more broadly about developments in the blockchain space, Yao told SCMP that he expects blockchain to go mainstream within the next half-decade.

“Blockchain will become the mainstream technology in the next three to five years,” he said. “We are entering the next stage of blockchain evolution, a stage which is akin to when computer operating system was transiting from MS-DOS [disk operating system] to MS-Windows.”

The proliferation of trustworthy stablecoins is viewed by many as an important step in that process, as it would provide users with exposure to some of the chief benefits of cryptocurrency technology (e.g. rapid cross-border settlement) without the price volatility. There are some trade-offs, including the need for stablecoin issuers to adhere to KYC/AML policies and — in some cases — transaction censorability, but institutions and other highly-regulated firms may be willing to make this exchange.

Earlier this month, two New York-based charter companies, Gemini and Paxos, launched USD-pegged stablecoins, which both firms touted as the first “regulated” stablecoins.

This post credited to ccn  Image from Shutterstock