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

Mt. Gox won’t sell Bitcoin immediately

Mark Karpeles, the former CEO of defunct Japanese crypto exchange Mt. Gox, said that the firm will not dump its Bitcoin stake to repay creditors as of now: “As far as I know, everything is fine with Mt Gox. The trustee is moving coins to a different wallet in preparation for the distribution that will likely happen this year; there is no imminent sale of Bitcoins happening,” Karpeles wrote.

In a statement to Cointelegraph, Neil Roarty, analyst at investment platform Stocklytics, said that any potential flash sale by Mt. Gox could upset the current supply and demand dynamic:

“The more than 100,000 previously dormant Bitcoin thatMt.Gox’s trustees could imminently unleash on the market may swing the scales.”

“Remember, fewer than 20 million Bitcoins exist right now, but roughly a third of those haven’t been traded for more than five years. A further portion is believed lost forever; that could be anywhere from two to six million Bitcoin. Suddenly 100,000 looks like more than a drop in the ocean,” he added.

Mt. Gox was the biggest Bitcoin exchange in the world when it filed for bankruptcy in 2014 after discovering that 850,000 of its customers’ Bitcoin (BTC) had been stolen after years of subtle siphoning. The exchange has since recovered around 200,000 BTC.

The funds have been held in trust for the creditors, with 162,106 BTC ($11.38 billion) sitting in several wallet addresses tracked by Token Unlock. Creditors are due to be repaid later this year in a decade long bankruptcy proceeding.

Mt. Gox creditors protesting wait times for return of funds (X)
Mt. Gox creditors protesting wait times for return of funds (X)

Hong Kong regulators to kick out all unlicensed exchanges by June 1

Hong Kong’s Securities & Futures Commission (SFC) will require all unlicensed virtual asset trading platforms (VATPs) to exit the city starting next month:

“All VATPs operating in Hong Kong must be either licensed by the SFC, or “deemed-to-be-licensed” VATP applicants under the AMLO.”

“It is a criminal offence to operate a VATP in Hong Kong in breach of the AMLO [Anti-Money Laundering and Counter-Terrorist Financing Ordinance], and the SFC will take all appropriate actions against any breaches of the law,” it states.

During a grace period for registration lasting one year, more than 22 cryptocurrency exchanges applied for licenses to maintain their presence in the region, including Gate.io and OKX. However, many of these exchanges ultimately decided to withdraw their applications just before the deadline.

Despite having a VATP licensing regime active since last June, the only crypto exchanges approved by Hong Kong regulators remain Hashkey and OSL Group. Among numerous requirements, exchange applicants are required to submit audited financial returns, use verified custodians for users’ deposits, and acquire insurance. Some exchanges have folded in the past due to regulatory pressure.

Hong Kong “a great contributor” to China’s digital economy

Despite the country’s ongoing Bitcoin ban, Chen Chun, Professor of the School of Computer Science and Technology at the state-affiliated Chinese Academy of Engineering, praised Hong Kong as a “sandbox” for the development of Web3 and the digital economy of Mainland China.

“Hong Kong needs to take advantage of the technical characteristics of Web 3.0, clear space boundaries as to create clarity, increase in the development of productivity, and progress in risk prevention,” said Chun, who also raised the importance of tokenized assets in this endeavor:

“Based on the immutability of blockchain, it can expand on non-platform internal participants rights, such as preventing multiple uses of data, making the data itself generate higher value and construct a fair, equitable, and credible network of information.”

Chun also raised the importance of creating a digital currency that can cope with the complexities of the Web3 network, recommending that Hong Kong regulators should target an initial $26 million to $260 million money supply for its central bank digital currency.

In February, Hong Kong allocated $383 million to its Cyberport initiative, which aims to attract Web3, blockchain, and AI firms to the East Asian city. Paul Chan, Hong Kong’s financial secretary, also revealed that the city’s AI Supercomputing Centre will start operating this year. By early 2026, it is expected to have a computing power of 3,000 petaflops, capable of processing almost 10 billion images per hour.

Chinese Academy of Engineering professor Chen Chun. (World Young Scientist Summit)
Chinese Academy of Engineering professor Chen Chun.

Huobi co-founder’s investment firm recovers 108% of deposit from FTX collapse

Hong Kong crypto investment firm Sinohope, created by Leon Li, co-founder of crypto exchange Huobi Global (now HTX), has recovered over 100% of deposits stuck on bankrupt crypto exchange FTX.

Through its subsidiary, Hbit Limited, Sinohope managed to sell $18 million worth of its FTX digital asset claims to Delaware-based debt investment firm Ceratosaurus Investors LLC for $19.5 million, indicating a recovery of 108% on its initial deposits.

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Currently, FTX claims are trading for $1.29 to $1.43 on the dollar, largely due to the significant rise in the price of digital assets since November 2022, when FTX declared bankruptcy.

The move is by all measures, a happy ending for Sinohope’s woes. As a result of the FTX contagion, Leon Li had to personally extend a $14 million personal line of credit to bail out affected customers. On Dec. 13, 2023, the firm disclosed that it expects a loss of $280 million Hong Kong dollars ($35.86 million) for the first nine months of the year, including $86 million Hong Kong dollars ($11 million) of immobilized enterprise deposits.

Huobi co-founder Leon Li (PR Newswire)
Huobi co-founder Leon Li (PR Newswire)

Binance reportedly sells Gopax creditor claims at steep discount

Crypto exchange Binance, which last year purchased a majority stake in Gopax, a top five Korean crypto exchange by market share, reportedly sold asset claims of Gopax users against bankrupt crypto investment firm Genesis Global at less than half their fair value in August 2023.

According to the Korean Economic Daily report, Gopax initially owed its users 70 billion won ($50.9 million), who had staked their crypto assets with GoFi, the exchange’s staking service, with Genesis serving as the custodian. However, after paying users 35 billion won ($25.5 million) through the sale of creditor claims, the remaining balance of 35 billion won ($25.5 million) has increased to more than 100 billion ($72.7 million) due to the appreciation of crypto assets since Genesis declared bankruptcy in 2022.  

In March, the Korean Times reported that Gopax is currently in a “state of complete capital impairment” due to the increase in debt liabilities. Earlier this month, Genesis secured a $3-billion approval in U.S. bankruptcy courts to return cash and cryptocurrency to its remaining creditors.

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, Nasdaq.com and Seeking Alpha.

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