News Updates August 31, 2022

1. Arrested in South Korea over Suspected Crypto Kimchi Premium Trading Violations

South Korean authorities have swooped on suspected kimchi premium traders – making 16 arrests linked to some USD 1.4bn worth of crypto transactions.

Per the media outlet Newsis, as well as KBS and NoCut News, the individuals were all arrested by Seoul-based customs officials, with two cases already sent to prosecutors. Not all of the 16 are believed to be traders – some may be suspected brokers or intermediaries. A large number of the arrested individuals are still being questioned by officers, with the authorities yet to decide if their cases should be forwarded to the prosecution service. Others have already been fined.

All were arrested under the terms of the Foreign Exchange Transactions Act. As reported, financial regulators have been investigating all of the nation’s major commercial banks over suspected negligence. They claim that the sum total of illegal kimchi premium trading conducted via South Korean banks may be as high as USD 6.5bn, although the precise total will likely be revised after the regulators complete their audits.

Kimchi premium trading refers to a situation whereby growth in domestic demand for coins like bitcoin (BTC) drives prices in South Korea up above the global average.

As such, many traders have attempted to buy tokens from over-the-counter (OTC) sellers, usually based in China and Japan. These coins have then been dumped onto South Korean platforms and sold for fiat, yielding eye-watering profits. This fiat has then been reportedly used to buy commodities from abroad, including precious metals like gold and semiconductor chips. The initial remittances to the OTC vendors may have been made via the South Korean banks – as, regulators such as the Financial Supervision Service (FSS) say, were the commodities purchases.

2. Singapore court rules in favor of Bithumb founder in acquisition case

The decision on the civil lawsuit might affect a trial court in South Korea.

 *The court drama behind the acquisition of*

South Korean crypto exchange Bithumb has been going on for several years, but in an unexpected development, a Singapore court has made a ruling against Kim Byung-gun, who has originally accused the owner of Bithumb, Lee Jung-hoon, in defrauding him. 

According to the South Korean publication Aju Daily, on Aug. 26, after three years of proceedings, a court in Singapore found Kim guilty of selling BXA coins without the permission of his partner Lee and ordered him to return the proceeds gained from the sale of coins to Singapore-based consortium BTHMB.

The decision of this civil case might affect the trial court, that has been held in South Korea. In that case, Kim accused Lee of defrauding him in the process of a jointly planned acquisition of Bithumb.

 *South Korean authorities raid 15 entities linked to Terra collapse: Report*

As his narrative goes, in October 2018, Lee Jung-hoon discussed the purchase and joint management of the Korean exchange with the chairman of BK Group and the founder of a line of cosmetic surgery clinics, Kim Byung-gun. Partners registered the BTHMB consortium to buy out a 50% stake in Bithumb Holdings — Lee reportedly received $100 million upfront as a “contract fee” from Kim, another part of the funds, demanded to close the acquisition, should have come from the sale of BXA coins issued by BTHMB.

Yet the token was never listed and the consortium didn’t take over Bithumb as it failed to pay the balance. Kim filed a complaint against Lee in a Korean court in 2020. But even beforehand, in 2019, Lee accused his ex-partner of selling BXA tokens on his behalf in Singaporean court.

Meanwhile, Bithumb casually continues its operation — in January 2022, it confirmed the development of a nonfungible token exchange that would help it stay competitive with Korbit and Upbit, two other domestic Korean exchanges. In July, the current owner of Bithumb, Koren company Vidente, revealed that it has contacted FTX on the subject of a possible sale of its stake.

3. Bitcoin Defends $20K But is Another Drop Imminent? (BTC Price Analysis)

The Bitcoin bear market appears to be far from over as the price has dropped to the bulls’ last line of defense before another massive leg down. The short-term and even mid-term price action of Bitcoin could be determined in the next few days.

Looking at the daily chart, the recent downtrend was initiated after the price was rejected from the $24K static resistance level. Moreover, it was rejected from the 100-day moving average at the same price, acting as a dynamic resistance. A bearish breakout and consolidation below the 50-day moving average have signaled that the current drop is more likely to be a bearish reversal than just a short-term pullback.

Eventually, the price climbed back to the $20K level and appears to be supported once again. However, a potential bounce from this area would likely be a bullish correction before another run lower.  This is a probable scenario if the price fails to break the 50-day and 100-day moving averages around the $22k-$24K area to the upside

On the 4-hour timeframe, the price has broken the smaller bearish flag formed at the lower boundary of the larger flag to the downside. Consequently, it has dropped rapidly towards the $20K level. A bullish rebound is currently in play as the price has been supported at the mentioned level. As of now, a retest of the $21K resistance level seems imminent.

Interestingly, the RSI moving average has formed a massive bullish divergence between the two recent lows, pointing to a potential reversal from this area. However, no positive could be considered probable until the price breaks the $21K level to the upside convincingly.

The price action is still suggesting that the market structure is bearish. And so, the RSI signal could turn out to be a fake one.The market appears to be seeking direction, but the big players are standing still. Following last week’s FOMC meeting, Bitcoin plummeted below its “Realized Price,” a necessary threshold to defend. Meanwhile, the MVRV ratio has dropped below 1 again, and the bearish cycle seems far from over.

4. Russia says crypto is “safe alternative” for cross border payments

While on one level it feels silly to talk about cryptocurrencies in Russia when there is a literal war going on, this is a crypto site.

In that context, some very interesting developments have come out of Russia over the last day. Russian Prime Minister Mikhail Mishustin declared cryptocurrencies could be a “safe alternative” for cross-border payments.

“We need to intensively develop innovative areas, including the adoption of digital assets. This is a safe alternative for all parties that can guarantee uninterrupted payment for the supply of goods from abroad and for export.”

It is also worth mentioning that this announcement comes on the back of Iran’s trade ministry approving crypto as a means of payments for imports. Iran has essentially been cut off from the global banking system as a result of its nuclear programme, which has led to countries placing sanctions on the nation.

Russia, of course, is no stranger to sanctions themselves. Following their invasion of Ukraine in February, the Western World pushed back by instilling a bevvy of economic sanctions, hoping to suffocate the Russian economy and tear the value of its ruble currency down.

This brought up what can at times be a polarising subject – the use of crypto as a potential medium to evade such sanctions. These comments by Mishustin referring to crypto as a “safe alternative” will do nothing to dampen that debate.

But it does demonstrate the power of crypto. I saw this first hand in my trip to El Salvador last month, where people spoke of the advantages Bitcoin offered regarding remittances. El Salvador is in the top 10 countries in the world for remittances as a portion of GDP, and the average fee on such remittances is a crazy 6.5%.

Cutting these fees out through using Bitcoin can be a huge plus to those receiving money from loved ones abroad. In Russia and Iran’s case, while remittances will be aided too, they are not as big a factor as they are for El Salvador. In their cases, the massive boon is the enhanced ability to evade sanctions.

5. EU Lawmakers Vote Down Green Crypto Mining Study

The Green Party had pushed for research into mining techniques after failing to impose restrictions on bitcoin-style proof-of-work

EU lawmakers on Thursday shot down a Green Party proposal to research alternatives to the proof-of-work (PoW) mining that underpins bitcoin (BTC).
The Green Party effort followed an unsuccessful attempt by some members of the European Parliament to impose restrictions on the energy-intensive PoW consensus mechanism that some had characterized as a bitcoin ban.

Ernest Urtasun, a Spanish member of the parliament’s Green caucus, told the Economic and Monetary Affairs Committee he was “disappointed” by the decision of lead lawmaker Stéphanie Yon-Courtin to effectively kill the idea by withdrawing her support.
The green proposal, said Urtasun, “by no means interferes” with separate legislation known as the Markets in Crypto Assets Regulation (MiCA) – a law requiring licenses for crypto providers whose details were tentatively agreed upon in June.

It’s designed as a follow up to that regulation with the aim of supporting the [European] Commission’s future work on that issue,” Urtasun said, shortly before committee members voted to reject his plans.
“There is evidence that crypto-assets can cause significant harm on the climate and environment,” said the amendment put forth by Urtasun, which called for 800,000 euros (US$803,000) of public money to be committed to developing a scientific way to measure the environmental impact of mining and identifying greener alternatives.

Urtasun was seeking to hook his plans into an opinion produced for the parliament’s budget committee, which takes the lead in negotiating how the EU’s overall budget – roughly 185 billion euros per year – should be spent.

6. Asia crypto advocates look beyond English to promote digital assets

Cryptocurrency advocates and exchanges in Asia say they are teaching the ins and outs of digital assets and blockchain in regional languages to help promote crypto investments and protect people against scams.

* Philippine crypto exchange Coins.ph, which also operates in Thailand, said it is offering crypto education classes in Filipino and Thai languages through its Coins Academy to open up opportunities in digital asset investment to non-English speakers. 

* Wei Zhou, the chief executive officer (CEO) of Coins, told Forkast that English is the primary language in crypto, but a lot of the audience that his company communicates with do not know the language.   

* As a result, Coins wants to “transfer that [crypto] knowledge” in local languages, whether it is Tagalog in the Philippines or in Thai in Thailand, as well as in other languages as it expands, Zhou said. This will also help protect people from scams, he added.

* Likewise, Bitskwela, a self-described Philippine-led edutech platform, is offering Bitcoin and cryptocurrency-related courses in Filipino, Cebuano and Ilocano, all regional languages in the Philippines. 

* Jiro Reyes, the CEO of Bitskwela, told Forkast that for local newbie investors English can be intimidating, and so explaining the asset class in local languages is important for crypto literacy and adoption at the grassroots level.

• Reyes added that lack of proper knowledge can lead to bad financial decisions and cryptocurrency investments are no different.

7. Ukraine’s National Police Exposes Crypto Cybercrime Group Targeting Europeans

The National Police of Ukraine exposed a network of call centers targeting victims of crypto scams in order to steal personal information.

The National Police of Ukraine (NPU) successfully took down a network of "call centers" on Tuesday that targeted Ukrainian and European Union citizens who had been victims of crypto scams. 

The fraudulent call center allegedly offered to help those affected by crypto scams as well as recommending investment packages in crypto, gold, oil, and other securities, according to the NPU official announcement

Ukraine’s national police stated that this group spoofed countries’ national banks and used websites and exchanges to lure in European customers and get their confidential data. 

According to the NPU’s report, victims were told to pay a commission in order to reclaim any lost funds. Once they paid the fee, however, “communication with the ‘brokers’ was interrupted and payments were not made,” said authorities.

The cybercrime group’s computers, phones, and data storage systems were seized and taken, while the call center’s members are being charged with “fraud committed on a particularly large scale or by an organized group.”

8. British National Accused in OneCoin Scam Set to Face US Extradition: Report

Co-accused Robert McDonald avoided extradition on human rights grounds.

Christopher Hamilton, a British national accused of money laundering and wire fraud related to the $4 billion OneCoin scam, lost his bid to avoid extradition to the U.S. on Tuesday, according to a report from Law360.
U.K. District Judge Nicholas Rimmer rejected Hamilton's plea that he should be tried in the country since the fraud he committed occurred outside the U.S.
"Wherever victims are based, it is in their interests for perpetrators involved to be prosecuted rather than not to be,” Judge Rimmer wrote, according to Law360. “This factor weighs in favor of extradition.”

The extradition may not be final if Hamilton decides to file an appeal. Additionally, the case will now be sent to the Secretary of State for a final decision.
Robert McDonald, a co-accused, avoided extradition on human rights grounds. McDonald is the prime care giver for his "extremely ill" wife and has expressed "clear and genuine suicidal intent, in the event he were to be extradited," according to the judgment cited in the Law360 report. The judge also stated that "there is no apparent evidence of monetary gain by Robert MacDonald."

Hamilton and McDonald are accused of laundering $105 million of the $4 billion global scam, which was perpetrated by fugitive "CryptoQueen" Ruja Ignatova.
The U.S. extradition proceedings relate to millions of dollars sent to accounts controlled by Hamilton in the name of an entity called Viola Asset Management. McDonald was the company's compliance officer.