Bithumb in turmoil, Binance’s 47K law requests, Axie players down 85%: Asia Express

Our weekly roundup of news from East Asia curates the industry’s most important developments.

Bithumb in turmoil 

On Jan. 25, Yonhap Infomax reported that South Korean authorities had requested an arrest warrant for Kang Jong-Hyun, chairman and owner of cryptocurrency exchange Bithumb, over embezzlement allegations. That same day, the Financial Investigation Second Division of the Seoul Southern District Prosecutor’s Office accused Jong-Hyun and two Bithumb executives of embezzlement, conducting fraudulent transactions and breach of trust. 

Authorities said that Kang played a key role in manipulating the stock prices of Bithumb affiliates Inbiogen and Bucket Studio through the issuance of convertible bonds.

Bithumb is one of the largest cryptocurrency exchanges in South Korea. Its previous chairman, Lee Jung-Hoon, was found not guilty last month of a $70 million fraud charge related to his activities at Bithumb. Park Mo, Bithumb’s former largest shareholder, died on Dec. 30 while under investigation for allegedly embezzling funds from Bithumb and related companies. The firm is also currently probed by the National Tax Service over tax compliance incidents. 

Binance’s 2022 annual report

In its annual report released on Jan. 19, cryptocurrency exchange Binance revealed that the firm received more than 47,000 law enforcement inquiries throughout the year. The exchange said such requests were processed “at a record time” and that it was the first among blockchain firms to join the National Cyber-Forensics and Training Alliance, a nonprofit cybercrime fighting unit based in Pittsburg. 

In response to the inquiries, Binance said it increased the headcount of its security team by more than 500% and hosted 70 law enforcement workshops around the globe in 2022 to help fight blockchain-related financial crime.

In the event of security incidents, Binance also stated it would tap into funds from its $1 billion SAFU (Secure Asset Fund for Users) user insurance program to compensate for losses. The exchange also tightened requirements such as NFT listings. Starting Feb. 2, Binance will delist all NFTs listed before Oct. 2 that had an average daily trading volume of less than $1,000 between Nov. 1 and Jan. 31.

In January 2022, we announced that SAFU was worth

$1B. Due to market conditions in 2022, that value

dropped to $735m. As of November 2022, we topped the

SAFU balance back to $1B. We made a promise to our

users, along with the larger crypto ecosystem, that SAFU

would always maintain a sizable level.

The exchange received 14 licenses and regulatory registrations in 2022. Other highlights include its $1 billion pledge for an industry recovery fund amid FTX’s collapse and investing $500 million into Web3 and blockchain firms through Binance Labs. Although it does not have a fixed corporate office, the exchange’s governing jurisdiction is the Hong Kong International Arbitration Center for legal disputes. Its servers are also reportedly located in Japan. 

Axie Infinity’s declining numbers 

The latest data from the website Active Player reveals that the number of players of the popular monster battle P2E game Axie Infinity, developed by Vietnamese gaming studio Sky Mavis, fell to 432,001 in the past month. This represents the lowest level seen since November and means the game has lost approximately 85% of its player base over the past year. 

Initially a groundbreaking GameFi success, Axie Infinity has fallen on hard times as the crypto winter took a toll on its play-to-earn dynamic, which was exacerbated by the infamous Sky Mavis Ronin bridge hack last March. New features, such as the much-anticipated Land Gameplay release on Dec. 28, did not appear to reverse the declining trend. At the time of publication, about $3.85 million worth of Axie NFTs changed hands in the past 30 days, compared with $639.5 million in November 2021. 

City of Busan’s crypto exchange

As first reported by local news outlet News 1 Korea, the city of Busan is working to establish a decentralized digital assets exchange scheduled for operations this year. According to municipal officials, the exchange will include buying and selling of tokenized intellectual property rights for films and games, as well as trade in gold, precious metals, agricultural and livestock products, ships and real estate. The Busan Digital Asset Exchange Establishment Promotion Committee plans to coordinate with domestic financial companies and conduct system tests in the near future. 

Bybit’s Genesis exposure 

In a Jan. 20 Twitter thread posted by Ben Zhou, CEO of Singaporean cryptocurrency exchange ByBit, the blockchain executive clarified the exchange positions after questions arose regarding an alleged $151 million exposure to bankrupt crypto lender Genesis Global. As told by Zhou, the exposure amount is limited to Mirana, the investment arm of ByBit, and that $120 million of collateralized positions out of the $151 million exposure amount “had already liquidated.”

Zhou claims that Mirana only manages “some” ByBit company assets and that clients’ funds are separated. In addition, Zhou said that ByBit Earn products don’t use Mirana. Genesis Global froze withdrawals last November, citing “unprecedented market conditions,” and filed for bankruptcy on Jan. 20, reportedly owing $3.5 billion to over 50 creditors. 

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