Low users, sex predators kill Korean metaverse, 3AC Terra: Asia Express sues

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

The South Korean metaverse is being shut down by scandals and lack of interest.

South Korea's tech-savvy population, fast internet and deep-rooted gaming culture make it a perfect testbed for Metaverse applications. Despite these advantages, some of the country's top metaverse platforms are now closing their doors.

The latest casualty is Block 2, the Metaverse developed by Dunamu, the operator of South Korea's largest cryptocurrency, UpBit.

Dunamu has announced that it will shut down its Metaverse services on September 9 due to poor engagement since the outbreak began.

This follows a similar move by the Seoul Metropolitan Government. Last month, the city said its Metaverse project, which cost $4.5 million to build, will lock its virtual doors on Oct. 16. Designed to provide a digital space for residents and tourists to interact and explore, the Seoul Digital Edition has been around for less than two years.

Even the survivors of the metaverse are fighting their own issues.

Developed by the South Korean Internet company Naver, Zepeto has been able to grow by shifting its focus to the international market. As of last year, it had 20 million monthly visitors from overseas and just 1.2 million domestic users, according to data analytics firm Sensor Tower.

At home, the forum came under fire after several parents reported that their children's avatars had been sexually harassed by other users.

At worst, predators are said to force minors to share images in exchange for in-game content.

In response to these incidents, South Korean lawmakers have proposed amendments to existing laws to include prison terms and fines for virtual sex offenders.

However, the bill ultimately failed to pass the National Assembly, leaving the matter unresolved.

Due to difficulties in tracking poachers in digital spaces across international borders, most complaints remain unresolved.

3AC liquidators sue Terra for $1.3 billion in Terra's failure

Liquidators of defunct Singaporean crypto hedge fund Three Arrows Capital (3AC) have filed a $1.3 billion lawsuit against Terraform Labs.

In court filings, 3AC liquidators Russell Crumpler and Christopher Farmer of Teneo Holdings, Terraform Labs, misled 3AC about the algorithmic stable coin TerraUSD (UST) and its sister token LUNA, prompting the hedge fund to make huge bets on its assets.

The liquidators are not only looking for outright purchases of UST and LUNA, but also for losses on 3AC's crypto investments caused by the collapse of Terra.

The 3AC chaos began in May 2022, when Terra UST lost its anchor in the greenback, costing the Terra ecosystem $40 billion.

Despite assurances from Terra co-founder Kwon Do-hyung (better known as Do Kwon), Stistacoin's collapse caused a chain reaction in the crypto market, eventually leading 3AC to file for bankruptcy in July 2022.

The hedge fund, which once managed up to $18 billion in assets, argued that Terra's failure caused irreversible financial damage.

Terraform Labs filed for bankruptcy in January 2024. In June, the company agreed to a $4.47 billion settlement to settle an SEC civil lawsuit.

Meanwhile, Kwon was found guilty by a US jury in April 2024 of defrauding investors and is awaiting extradition rulings in Montenegro. The extradition to South Korea was delayed by the Montenegrin Supreme Court last week.

Malaysian police are on the hunt after crypto kidnappings.

Malaysian police are on the lookout for four people allegedly involved in the kidnapping of a Chinese man and a Malaysian woman. According to state-backed news agency Bernama, the victims were kidnapped on July 11 and released four days later on July 15 after a ransom was paid in cryptocurrency.

The four wanted suspects are part of a group of 18 suspected in the crime. In early August, police killed four suspects in a shootout and arrested 10 others. Among those involved was a male victim who worked as a driver.

An estimated $1.2 million worth of ransom cryptocurrency was reportedly split among the suspects following the release of the victims.

On August 15, six of the arrested suspects pleaded not guilty under Malaysia's kidnapping laws. If convicted, they face up to 40 years in prison and caning, which can include corporal punishment with whipping.

During the investigation, police seized 1.65 million Malaysian ringgit ($372,500) in cash and other assets, including vehicles valued at $700,000.

SBI's undying love for Ripple

SBI Holdings, the parent company of Japan's largest online brokerage SBI Securities, has announced a strategic partnership with Ripple Labs aimed at expanding the use of non-fungible tokens (NFTs) on the XRP Ledger (XRPL).

SBI Digital Community, a subsidiary of the partnership, will educate its Bto3 community members on how to buy and trade digital assets at xrp.cafe, the NFT marketplace on XRPL.

SBI's relationship with Ripple and XRPL is not new.

The company's remittance arm SBI Remit has been using XRP for cross-border transactions since 2017, making it one of the first adopters of the Ripple-backed technology.

In April 2024, SBI became the first Japanese corporation to use XRPL's supply chain services.

In the US, Ripple's years-long legal battle with the Securities and Exchange Commission (SEC) is heating up.

In the year In an August 7 filing, Ripple was ordered by U.S. Magistrate Annalisa Torres to pay a $125 million civil penalty and permanently enjoin the company from violating securities laws. The fine is much lower than the $2 billion required by the SEC.

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John Yun

Yohan Yun is a multimedia journalist who has been reporting on blockchain since 2017. He has contributed as an editor to crypto media outlet Forkast and covered Asian technology stories as an assistant reporter for Bloomberg BNA and Forbes. He spends his free time cooking and experimenting with new recipes.