🔒American Binance Exec Jailed in Nigeria,🚨Do Kwon To Be Extradited To The US,📈LATAM's Crypto Surge

April 13, 2024

Your 5 minute emerging markets web3 weekly update

In This Issue

Africa
🔸American Binance Executive Held in Nigerian Prison After Pleading Not Guilty to Money Laundering Charges
🔸South Africa's Regulatory Milestone: Luno and Zignaly Secure Crypto Licenses, With 60 More Firms Expected

Asia
🔸Hong Kong's HashKey Group Launches Global Exchange to Rival Coinbase
🔸Dubai's Crypto Regulatory Chief Aims to Ease Compliance Burden for Startups

Eastern Europe
🔸Extradition Update: Do Kwon Likely Headed to US for Trial
🔸Russia's Central Bank Pushes for Faster Legalization of Crypto Payments for International Trade

Latin America and the Caribbean
🔸Don’t Sleep on LATAM, 1 in 5 People Have Invested in Crypto: Study
🔸Bitfinex Launches Tokenized Debt Offering for Hilton Hotel Project in El Salvador

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Africa

Image Credit: Dall-E 3

Binance's Head of Financial Crime Compliance and former US IRS Special Agent, Tigran Gambaryan, has pleaded not guilty to five counts of money laundering charges in Nigeria filed against him and Binance by the country's Economic and Financial Crimes Commission (EFCC). The EFCC accused Binance - one of Nigeria's most popular cryptocurrency platforms - along with Mr. Gambaryan and Nadeem Anjarwalla, a British-Kenyan dual national and Binance's Africa Regional Manager, of laundering $35.4m. In addition to money laundering charges, Binance and the two executives also face four counts of tax evasion, filed by the Federal Inland Revenue Service. After the hearing, Mr. Gambaryan was transferred to Kuje Correctional Centre, a prison facility that has, in the past, held inmates ranging from jihadists to politicians. The Nigerian government has blamed Binance for currency speculation and fixing exchange rates, leading to the free-fall of the local currency, the naira. Meanwhile, Nigeria's Economic Financial Crimes Commission (EFCC) is 'partnering' with INTERPOL, the FBI and the British and Kenyan governments to secure the arrest and extradition of Mr. Anjarwalla, according to a government official.

South Africa's financial regulator has begun granting crypto licenses, with Luno and Zignaly among the first recipients, marking a significant move towards regulatory clarity in the country's crypto space. Luno received approval as a financial service provider under South Africa's Financial Advisory and Intermediary Services Act, while Zignaly obtained a Category 2 license allowing discretionary fund management. These developments follow the regulator's acceptance of licensing applications from crypto firms with around 60 firms expected to be approved by April, and follows legislation passed in June 2023 to regulate crypto activities and issue hefty fines for unlicensed firms.

Asia

Image Credit: Dall-E 3

HashKey Group, the leading licensed cryptocurrency exchange operator in Hong Kong, has launched HashKey Global. The new platform aims to surpass Coinbase in trading volume within five years. It operates with a Bermuda-issued license but is restricted in certain markets like the US, mainland China, and Hong Kong due to regulatory reasons. The launch of HashKey Global marks a strategic move to capture a global market share, particularly targeting overseas Chinese and investors in Asian markets who seek access to offshore crypto exchanges without restrictions. It aims to offer a compliant yet user-friendly experience amidst intense competition in the cryptocurrency exchange landscape. However, Livio Weng, the chief operating officer of HashKey Group and chief executive officer of HashKey Exchange, told the Financial Times that its decision to launch an exchange licensed in Bermuda this week was in part owing to fears that the new regulations in Hong Kong restricted access to overseas investors. HashKey Exchange now has over 170,000 registered users.

During Paris Blockchain Week, Matthew White, CEO of Dubai's Virtual Assets Regulatory Authority (VARA), expressed his aim to reduce compliance costs for small crypto firms. He is also seeking ways to make regulations more inclusive and accessible. As the sole digital assets regulator in Dubai, VARA's efforts to streamline regulations follow the unveiling of crypto rules last year. This move was generally welcomed by the crypto industry, although it raised concerns about high compliance costs for smaller entities. White discussed exploring structures where larger market participants could host smaller companies to help them meet compliance challenges. Several firms, including Crypto.com and Deribit's Dubai unit, have successfully obtained licenses to operate under Dubai's crypto regulations.

Eastern Europe

Image Credit: Dall-E 3

Montenegro's Supreme Court reversed earlier decisions to extradite Do Kwon, co-founder of Terraform Labs Pte., to South Korea, and now favors extraditing him to the US for fraud charges linked to the 2022 collapse of the TerraUSD stablecoin. Do Kwon's lawyers have fought for extradition to South Korea, which imposes weaker penalties for white-collar crimes compared with the US. The final decision on Kwon's extradition now rests with Montenegro's justice minister, who is expected to choose the US. In the US, Kwon and Terraform Labs have already been found liable for fraud in a lawsuit filed by the SEC.

The Bank of Russia is pushing for the legalization of cryptocurrency in international payments, emphasizing the need to accelerate the adoption process through experimental legal regimes (ELR), according to Central Bank head, Elvira Nabiullina. She emphasized that initial cryptocurrency payments will operate under an ELR, while projecting that mass adoption of the digital ruble in Russia will take between five and seven years, with significant scaling expected by 2025, based on the results of the Bank of Russia’s pilot project. International settlements using digital financial assets (DFAs) can proceed without prior experimentation, following a law signed by President Putin on March 11th that granted the Bank of Russia regulatory authority over DFA transactions and established procedures for conducting foreign trade transactions using DFAs. Since this legislation, the bank has received three applications from businesses to test DFAs in foreign economic activities.

Latin America and the Caribbean

Image Credit: Dall-E 3

A recent study by Sherlock Communications revealed that 1 in 5 respondents (19%) in Latin America have invested in cryptocurrencies, marking a significant increase from the 11% recorded in the same study carried out by Sherlock in 2023. The study also shows that while 73% of respondents advocate for more stringent regulation of the crypto industry, 61% worry that such regulatory measures might impede cryptocurrency adoption. Blockchain technology is rapidly gaining momentum in Latin America, demonstrated by the adoption of crypto regulations and legal tender in countries like Brazil and El Salvador respectively. Additionally, its integration into the electoral processes in Ecuador and Guatemala further underscores this progress. In Mexico, 74% of respondents believe that stricter cryptocurrency regulations are necessary. Moreover, 85% urge the government to provide more official information on crypto assets, highlighting a growing demand for reliable knowledge about cryptocurrency investments. The survey indicated that 67% view central bank digital currencies (CBDCs) as effective tools to combat corruption in Latin America. However, the lack of in-depth understanding among citizens about CBDCs suggests that further education and awareness are necessary to promote widespread adoption and dispel myths surrounding cryptocurrencies.

Bitfinex Securities is launching a tokenized debt offering, under the symbol HILSV, to fund the construction of a Hampton by Hilton hotel complex at El Salvador's international airport. This offering will be traded against USD and USDT on the Liquid Network, a bitcoin sidechain. This move aligns with the growing trend of tokenization, providing investors and traders with more types of investment opportunities in cryptocurrencies. El Salvador's 2021 adoption of bitcoin as legal tender set a precedent, and this issuance reflects the nation's continued integration of cryptocurrency into its economy. The issuance aims to raise $6.25 million and offers a 10% coupon over five years. It requires a minimum investment of $1,000 and is facilitated by Inversiones Laguardia S.A. de C.V. According to the press release, Hilton Hotels, acting solely as a franchisor, has not endorsed this offering and assumes no responsibility.

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Written by Jon Lira. Connect with him on LinkedIn.

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