1. Hong Kong’s Weekly Summary

1.1 Man Kun: Mainland China and Hong Kong Mutual Legal Assistance Arrangement Takes Effect link

The article from ManKun Law Firm highlights that mainland China and Hong Kong have successfully ratified mutual judicial assistance arrangements, which have come into effect. Regarding legal disputes involving virtual currencies, Hong Kong’s judicial authorities may exhibit greater openness and inclusiveness. In the future, it will be entirely feasible to designate Hong Kong as the jurisdiction for disputes involving virtual currencies. Following successful litigation or arbitration in Hong Kong, enforcement can be sought in mainland Chinese courts in accordance with relevant judicial assistance arrangements. This approach not only circumvents the current unfriendly policy provisions towards virtual currencies in mainland courts but also provides a judicial remedy for commercial arrangements.

1.2 Hong Kong Privacy Commissioner’s Office Investigates Worldcoin Project Operations in Hong Kong link

On the 31st day of January, the Office of the Privacy Commissioner for Personal Data in Hong Kong, pursuant to a court order, conducted investigations into the Worldcoin project at six locations in Hong Kong, namely Yau Ma Tei, Kwun Tong, Wan Chai, Cyberport, Central, and Causeway Bay. It was indicated that the operation of Worldcoin in Hong Kong involves significant risks to personal data privacy, and the collection and processing of sensitive personal data by relevant entities may potentially contravene provisions of the Personal Data (Privacy) Ordinance.

1.3 Christopher Hui Stresses the Need to Regulate Over-the-Counter (OTC) Exchanges if Necessary link

The Financial Services and the Treasury Bureau of the Hong Kong Special Administrative Region, led by Secretary Christopher Hui, issued a statement indicating the need to regulate over-the-counter (OTC) exchanges and will commence consultations on the proposed regulatory framework in the near term. The Hong Kong Monetary Authority (HKMA) will introduce a stablecoin sandbox scheme to convey regulatory expectations and provide compliance guidance to issuers intending to issue fiat-backed stablecoins in Hong Kong. All exchanges that fail to submit applications by February 29th or have not received proper licensing notifications must begin winding down their operations.

2. The Mainland of China’s Weekly Summary

2.1 Significant Progress Made in Amending China’s Anti-Money Laundering Law link

Yan Lixin, the Executive Director of the China Anti-Money Laundering Research Center, emphasizes that the most pressing and necessary issue to address at the legal level currently is money laundering involving virtual assets. The use of cryptocurrency and virtual assets for money laundering has gradually become a mainstream trend, yet China’s laws lack a clear definition of virtual assets. The draft now covers responses to new money laundering risks, requiring financial institutions to assess money laundering risks before adopting new technologies and offering new products, and to implement risk management measures accordingly.

2.2 Inner Mongolia Cracks Down on Virtual Currency Platform Pyramid Scheme Involving Over 2 Billion RMB link

The Public Security Bureau of Yuanbao Sub-bureau, Chifeng City, Inner Mongolia, has cracked down on a case of virtual currency platform pyramid selling, which is suspected of using virtual currency for illegal pyramid selling activities. Upon investigation, it was found that this virtual currency platform is a tightly organized pyramid scheme operating nationwide from Beijing, with innovative criminal methods. As of the time of the case, the total number of registered members on the platform has exceeded 18,000, spanning across 13 provinces and cities, with a transaction volume of over 2 billion yuan. In May 2023, the police arrested 30 suspects and froze about 10 million yuan of assets involved in the case. Currently, two main suspects have surrendered themselves, and the case is under further investigation.

3. Binance Engages in “Early Discussions” Regarding Its Ownership of South Korean Crypto Exchange GOPAX Shares link

A spokesperson for Binance has stated that they are engaged in “early discussions” regarding their ownership stake in the South Korean cryptocurrency exchange GOPAX, and they are currently unable to disclose further details. Earlier reports from South Korean media suggested that Binance plans to sell off most of its shares in GOPAX. Binance acquired a majority stake in GOPAX in February 2023 as a means to re-enter the South Korean market. South Korea is currently tightening its cryptocurrency regulatory measures.

4. Thailand SEC Requires Zipmex to Halt Trading Services and Rectify Its Financial Situation Within 15 Days link

The Securities and Exchange Commission (SEC) of Thailand has ordered the cryptocurrency exchange Zipmex to suspend its digital asset trading and brokerage services. Earlier, the Thai SEC requested Zipmex to amend its capital maintenance and management structure. As of February 1st, the Thai SEC found that Zipmex had not complied with the requirements. Zipmex must correct its financial situation within 15 days and take measures to prevent the misuse of client funds. Only after obtaining approval from the Thai SEC can Zipmex resume normal operations.

5. Justin Sun Announces the Launch of HTX DAO, Plans to Develop Huobi Token (HTX) into a Decentralized Exchange link

On February 2nd, Justin Sun announced the launch of HTX DAO, where “H” represents Huobi HTX Exchange, “T” symbolizes TRON, and “X” signifies other entities within the DAO ecosystem. He stated the intention to transform Huobi HTX into a decentralized exchange and emphasized that HTX token holders will have voting rights for listing, inquiries, decision-making governance, and more. Sun mentioned that Huobi will donate 50% of its income to HTX DAO liquidity, TRON will contribute 50% of Huobi’s donation amount, and the percentage of donations from other ecosystem entities varies. Currently, the HTX DAO ecosystem includes Huobi HTX, Ankr, TRON, JustLend DAO, Poloniex, stUSDT, among others.

6. Sinohope Technology Reports Net Loss of 288 Million HKD in 2023 link

Sinohope Technology (01611) released its 2023 annual report, indicating a net loss of HK$288 million for the year, compared to a net loss of HK$206 million in the same period of 2022. The revenue was HK$2.994 billion, reflecting a 68.32% year-on-year decrease. The global economic downturn, coupled with the prolonged bear market in virtual assets, contributed to a significant decline in revenue from cloud services in 2023. This decline was primarily attributed to the decrease in virtual asset prices, which consequently led to a reduction in virtual asset trading volume. Sinohope Technology holds a pessimistic outlook for future performance and has already sold its subsidiary, Win Techno Inc.

7. Singapore High Court Approves DeFiance Capital’s Lawsuit Against 3AC link

The Singapore High Court has dismissed the bankruptcy application filed by the cryptocurrency hedge fund Three Arrows Capital (3AC) and supported the lawsuit brought by DeFiance Capital founder Cheong Jun Yoong (also known as Arthur Cheong) against 3AC. Cheong claims that the investors of DeFiance Capital are the ultimate beneficiaries of the trust assets held by 3AC, and he opposes using these funds to satisfy creditor claims. The court confirmed that the cryptocurrencies still controlled by 3AC in the Fireblocks wallet are indeed trust assets. The trial of this case will take place in Singapore, as the individual controlling the wallet keys is located in the country and has “sufficient connection” to the case.

8. Harvest Fund Submits First Bitcoin ETF Application in Hong Kong, Expected to Launch After Chinese New Year link

Harvest Fund Hong Kong submitted a Bitcoin spot ETF application to the Securities and Futures Commission of Hong Kong on January 26. This marks the first institution in Hong Kong to submit such an application. According to sources, the Securities and Futures Commission of Hong Kong aims to expedite the approval process for the first Hong Kong Bitcoin spot ETF. Plans suggest that after the Spring Festival, the first Hong Kong spot Bitcoin ETF will be listed on the Hong Kong Stock Exchange. Additionally, besides accepting fiat currency subscriptions, Hong Kong spot ETFs may also consider allowing direct subscriptions for Bitcoin.

9. VSFG Plans to Apply for Ethereum Spot ETF in Hong Kong in the Second Quarter link

VSFG is planning to apply for an Ethereum spot ETF in the second quarter in Hong Kong. Lawrence Chu, Chairman of VSFG, stated last week that the company is currently in the final stages of formally submitting an application for a Bitcoin spot ETF to the Hong Kong Securities and Futures Commission. Previously, VSFG expressed its intention to submit an application to the Hong Kong Securities Regulatory Commission and launch a Bitcoin spot ETF in this quarter.

10. South Korean Web3 Music Platform Somesing Targeted in Hacker Attack, Losses Exceed 11.5 Million USD link

The amount compromised by the hacker includes 504 million undistributed SSX tokens planned for circulation by the end of 2025, as well as 226 million SSX tokens held by the Somesing Foundation, which have already become part of the current circulating supply. Somesing has clarified that the hacking incident is unrelated to any members of the SOMESING team and speculates that it was orchestrated by professional hackers specializing in virtual asset attacks.

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