Asia Express – Cointelegraph Magazine

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

OKX token’s 48% flash crash

Cryptocurrency exchange OKX briefly experienced a 48% flash crash of its native token, OKB, on January 23. 

OKB's flash crash on January 23 (X).
OKB’s flash crash on January 23 (X).

In less than an hour’s time, around $6.5 billion in diluted market capitalization was wiped out before the token recovered its losses. OKX reported that an overall market sell-off on the day of incident triggered “the liquidation of multiple large leverage positions,” which was then exacerbated by the liquidations in “pledged lending, margin trading and cross-currency transactions.”

The price of OKB tokens fell from $48.36 to $25.10 within minutes before rebounding. At the time of publication, OKB tokens are trading at $48.77.

In a post-mortem update, the firm disclosed that liquidations were triggered by “50.69 to 48.36 USDT,” in OKB, or less than a 5% price move. The exchange has since pledged to reimburse users for all OKB-related losses triggered by the flash crash.

“We will further optimize spot leverage gradient levels, pledged lending risk control rules, liquidation mechanisms, etc., to avoid similar problems from happening again,” OKX said. “We understand this situation is unusual and apologize to impacted users.”

Asia Express – Cointelegraph Magazine

Asia Express – Cointelegraph Magazine

Hong Kong tech firm to invest 100 million HKD into Web3

Network security firm Integritytech HK Limited announced on January 24 that it will invest $100 million Hong Kong Dollars (US$12.79 million) to construct a “Digital Wind Tunnel Evaluation Center” to examine the security applications of new technologies such as 5G, artificial intelligence, blockchain, and Web3 in the region. The company stated:

“Through this cooperation and the construction and operation of the Hong Kong Digital Wind Tunnel Evaluation Center, it will help the company replicate and promote the digital security testing and evaluation experience accumulated in the Mainland in Hong Kong, further deepening the company’s business layout.”

In a similar move last month, Chinese venture capital firm GBA Capital has pledged a $10 billion Web3 fund to accelerate digital initiatives in the Guangdong-Hong Kong-Macao Greater Bay Area region. GBA Capital is backed by China’s state-owned National Engineering Laboratory and financial institutions, including the Asia Pacific Investment Bank and China Europe International Financial Group. The firm provides education training, industry capital, and investment incubation for Web3 and AI startups.

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Ondo Finance expands tokenized U.S. Treasury offerings to APAC

Real-world asset token issuer Ondo Finance has opened an office in Hong Kong and has plans to expand U.S. Treasury-denominated tokens to investors in the Asia Pacific Region.

“There is an active and rapidly growing crypto community and an appreciation for the type of high-quality exposure to U.S. assets that our tokens provide,” said Nathan Allman, CEO of Ondo Finance, about the move.

Ondo has three products: OUSG, which provides exposure to U.S. Treasuries; OMMF, which provides exposure to U.S. money market funds; and USDY, providing a yield-bearing alternative to conventional stablecoins that’s comprised of short-term Treasuries and bank deposits.

The products offer yields of around 5% per annum, which are in line with underlying U.S. Treasury yields and are only available to non-U.S. individuals who are classified as professional investors. The tokenized assets are minted on Ethereum, Solana, and Polygon. According to DeFiLlama, around $186 million worth of digital tokens are locked in the firm’s token pools.

South Korean crypto lending executive on the run

An individual identified only as “Mr. Bang” is currently subject to an arrest warrant by South Korean authorities for his alleged role in the collapse of the country’s crypto lending firms Delio and Haru Invest last year. 

According to local news reports on January 24, Mr. Bang is a 70% majority shareholder of B&S Holdings, one of Haru Invest’s consignment operators. Early last week, the police applied for an arrest warrant for Mr. Bang on charges of fraud under the Aggravated Punishment for Specific Economic Crimes Act, prompting the issuance of an arrest warrant by the Seoul Southern District Court. Another majority shareholder of the company, Mr. Song, has since fled to Japan. 

Last June, Haru Invest halted deposits and withdrawals after the discovery of alleged fraudulent activities in its accounting conducted by B&S Holdings. The move also led to the collapse of sister firm Delio. Both entities held over $1 billion combined worth of client’s digital assets at the time of incident discovery. 

It has since been revealed that B&S Holdings experienced “complete capital erosion” with sales of zero Korean Won on its books. Another related entity, Traum Infotech, a developer of a virtual asset trading platform, also allegedly suffered losses by re-investing a large amount of Bitcoin, Ethereum, and XRP entrusted by Delio to B&S Holdings. The investigation into the case is ongoing. 

Photo allegedly showing empty Haru Invest corporate offices after the announcement. (Telegram)
Photo allegedly showing empty Haru Invest corporate offices after announcing that withdrawals were to be suspended. (Telegram)

After receiving their retail crypto trading licenses last August, Hong Kong crypto exchanges OSL and HashKey are seeking to expand globally.

Earlier this month, OSL said that it would be incorporating geographical expansion outside of Hong Kong and Singapore as key tenets of its 2024 corporate strategy after receiving a $90 million investment last November.

In an interview with Cointelegraph on January 22, CEO Patrick Pan explained that the firm is also exploring a Fund Token initiative for the tokenization of retail fund products. “If authorized by the SFC [Securities & Futures Commission], these Fund Tokens, representing shares in a novel collective investment scheme under the Harvest-OSL brand, will be available to retail investors in Hong Kong,” the CEO stated.

In a similar move, HashKey Exchange Livio Wong told local media outlets on January 24 that it would apply for regulatory licenses outside of Hong Kong after the firm’s parent secured $100 million in Series A funding earlier this month. Wong also disclosed that the exchange witnessed an average of $638 million in daily trading volume in December, with the metric more recently hovering around $100 million.

The decline was partly due to HashKey Exchange’s new trading fees, which took effect in early January. Since the opening of retail trading, the exchange has listed a total of 19 major cryptocurrencies and altcoins, although the vast majority are only open to investors meeting a high net-worth threshold. 

Aside from exchanges, there are currently around 10 companies seeking to launch a Bitcoin Spot ETF in Hong Kong following the U.S. Securities and Futures Commission’s historical approval of such products in January. One firm, Samsung Asset Management, already has a Bitcoin Futures ETF listed on the region’s stock exchange.

OSL executive team at Autumn Dinner 2023.
OSL executive team at Autumn Dinner 2023.
Asia Express – Cointelegraph Magazine

Zhiyuan Sun

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

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