$6B Fraud Sued In Court, China Creates Loophole For Hong Kong Bitcoin ETFs: Asia Express

East Asia's weekly news roundup reviews the industry's most important developments.

A Chinese man was accused of fraud of 5.94 billion dollars

Chinese national Yadi Zhang has been arrested by UK authorities after defrauding more than 130,000 mainland Chinese investors out of 43 billion Chinese yuan ($5.94 billion) using bitcoin.

During her appearance at Westminster Magistrates' Court on April 20, Zhang indicated through an interpreter that she intended to plead not guilty to two counts of criminal possession of cryptocurrency. She was sentenced to prison.

“There should be no rush to judgment in this case. Ms Zhang maintains her complete innocence, her lawyer Roger Sahota of Berkeley Square Lawyers told the Financial Times.

Her assistant Wen Jian, a 42-year-old fast food worker from East London, was previously found guilty of money laundering. In the year In 2018, London police seized more than 61,000 bitcoins, worth $4.0 billion at the time, in a domestic violence case involving two women.

While working for a company called Blue Sky Grid, Zhang allegedly organized one of the largest Ponzi schemes in mainland China, with over 130,000 victims. Local news reported at the time:

“Blue Sky Grid was founded in Tianjin in 2014. With slogans such as environmental protection development, smart elderly care and bitcoin mining, the company uses zero risk and high interest discounts as bait and conducts product promotion meetings, arranges brokers and courses. And trainings, investment deals with the public. They sign and receive social funds.”

When investors get “enough interest” and want to get out, things aren't going well.

In the year In 2017, faced with intense pressure on ransom demands, Zhang was reported to have fled China, first buying a Myanmar passport under the name “Nan Yin” and using the forged document to obtain a St. Kitts and Nevis passport under the country's citizenship-by-investment program. Zhang then used a Norwegian passport to flee to England.

However, due to her lack of English skills and disability from a previous accident, Zhang is unable to take care of herself in England and needs a companion. Around this time, fast food worker Wen Jian, who was sleeping in the basement of the East London restaurant where she worked, saw a nanny job advertisement posted by Zhang and responded.

The two women quickly began a mutually beneficial relationship.

Using Jian's UK identity, Zhang was allegedly able to open legitimate accounts on crypto exchanges and siphon off her investors' capital, buying bitcoins and withdrawing cash from self-contained wallets. Meanwhile, Jian quickly adopted a lavish lifestyle, renting a luxury home in north London for £17,000 ($21,277) a month.

However, the saga ended after the two women tried to buy two historic mansions in north London for a total of £36 million ($45 million) when they failed to explain the source of the funds. This alerted the London police who suspected money laundering.

In the year In 2018, UK police raided Zhang and Jian's home and found 48 electronic devices including laptops, phones and USB sticks allegedly used to launder money into bitcoins. In the year In 2021, forensic police were able to decipher the devices and recover 61,000 Bitcoins, valued at $4 billion. The whereabouts of the rest of the looted money is not known.

There is no chance that Blue Sky Grid investors will not get their money back. After the arrests, UK police applied for a civil forfeiture of Bitcoin, which means that if the court approves, the stolen bitcoins will be returned to the UK government and auctioned off.

Chinese nationals banned from Hong Kong crypto ETFs.

Hong Kong regulators have made it clear that mainland Chinese residents will not be able to access Hong Kong spot Bitcoin and Ethereum ETFs after the launch on April 30.

“Currently, virtual asset futures ETFs on the Hong Kong market, regardless of future virtual asset space ETFs, cannot be sold to retail investors in Mainland China and other virtual asset trading venues. Products are prohibited,” the city's Securities and Futures Commission said in a statement. .

However, there is one small loophole: the ban does not apply to mainland Chinese residents with temporary or permanent residence permits in Hong Kong. Interestingly, all three issuers of the Hong Kong spot crypto ETF are Chinese offshore asset managers, and their products can be traded in Chinese yuan.

China's anti-money laundering laws and bitcoin ban, enacted in 2007 and 2021, prevent its citizens from accessing ETF products in Hong Kong. In recent years, Chinese citizens have used cryptocurrencies to gamble online, transfer wealth abroad, and launder the proceeds of crime.

Philippines SEC Cracks Down on Binance

The Philippine Securities and Exchange Commission (SEC) has asked tech giants Google and Apple to remove crypto exchange Binance's apps from the country.

The latest move follows warnings issued by the local SEC in November 2023 and a ban on Binance's website earlier this year. “The SEC has identified [Binance] And he concluded that the public's continued access to these websites/apps poses a threat to the safety of Filipinos' money to invest.

Authorities said Binance offered unregistered securities and was an unauthorized exchange in the country. The SEC has previously advised Filipino investors to withdraw their funds from Binance and engage with licensed service providers instead.

Binance is currently the largest crypto exchange in the world, with a daily trading volume of $65 billion, covering 402 cryptocurrencies and 183 million users. According to the Philippines SEC, after Binance is blocked by Internet Service Providers (ISPs) in the country, users will not be guaranteed to withdraw their funds from the exchange, possibly for three months.

Busy week to develop Bitcoin DAP

Singapore and Macau-based Bitcoin DeFi developer Microvision Chain (MVC) has launched its first asset bridge in its effort to build a fully functional BRC-20 DEX that supports exchanges and token exchanges.

“Asset Bridge addresses the problem of transaction congestion in the Bitcoin ecosystem, which includes BRC20 tokens, Runes, and other assets,” said Jason Kwok, COO and co-founder of MVC. We are proactively planning to partner with prominent security agencies and execute strategic campaigns to achieve higher total value locked targets.

Asset Bridge allows users to exchange Bitcoin and BRC-20 assets using L2 with low price impact and fast transaction settlement times. To perform the swap, users must first mine Bitcoin so it is accessible to DeFi. The target asset may then be converted to the relevant native tokens upon completion of the exchange.

Blockchain security firm CertK has completed an audit of MVC Asset Bridge. Going forward, MVC plans to implement a proof-of-construction model to encourage ecosystem developers to build asset bridges, Bitcoin DEXs, Wallets, and support for BRC-20 assets on the protocol. According to the proposal, 65% of the space's SPACE tokens will be distributed to builders based on their respective contributions. The project currently has a discounted market value of $300 million.

Singapore Crypto Exchange Offers $100M To Titan Chain Devs

Singaporean crypto exchange Tokenize Xchange has pledged to give away $100 million of its TKX tokens to encourage developers to build on its home country's blockchain.

Dubbed “Titan Chain,” the project combines interchain communication protocol Cosmos with the software development kit and compatibility with the Ethereum virtual machine. “Titan Chain's architecture includes reduced transaction costs, increased scalability, better energy efficiency, and a customizable, developer-friendly environment,” Tokenize Xchange staff wrote.

The organization will migrate the TKX token, which was previously developed as an ERC-20 asset, to the Titan Chain starting April 19. In the year Since its launch in 2020, the exchange's token has returned nearly 1,000% and has a fully mined market cap of $1.3 billion. The exchange was established in 2017 with over 350,000 active users.

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Zhiyuan Sun

Zhyuan Sun is a reporter at Cointelegraph, focusing on technology-related news. He has several years of experience writing for major financial media outlets such as The Motley Fool, Nasdaq.com and Seeking Alpha.