😨US & IMF Terrified By China's CBDC,🚷Bitcoin STILL Stumbling in El Salvador,🚨Kenyan Police Raid Worldcoin

August 12, 2023

Your 5 minute emerging markets web3 weekly update

In This Issue

Asia
🔸Running Scared: How the China-Backed CBDC Project Has the US and IMF Worried
🔸Rumors of Arrests, Insolvency, and Fraud Claims Trigger Turmoil at Crypto Giant Huobi

Latin America and the Caribbean
🔸Bitcoin Adoption STILL Not Going Well in El Salvador, the Average Person Just Doesn’t Get It
🔸Brazilian State of Maranhão Makes History as First Brazilian State to Join National Blockchain Network

Africa
🔸Eyes, Crypto, and Guns: Kenyan Police Raid Worldcoin Warehouse Amid Privacy Concerns
🔸Unbreakable Proof, Nigeria Uses Blockchain to Fight Certificate Forgery

Eastern Europe
🔸CoinsPaid Hacked, North Korea’s Lazarus Group Believed to Be Behind the $37 Million Theft
🔸Russia’s Digital Ruble May Face Liquidity Challenges, Says Sovcombank’s Chairman

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Asia

Image Credit: Alexandra_Koch via Pixabay

The mBridge CBDC project is rapidly advancing toward creating a digital platform that could potentially challenge the dominance of the US dollar in global finance. The joint initiative being developed by China, Thailand, Hong Kong, and the UAE, in partnership with the Bank for International Settlements, could potentially facilitate quicker and easier cross-border transfers by using a Chinese-built blockchain as the technological backbone, according to two people with direct knowledge of the project. Critics worry that such digital alternatives might facilitate evasion of sanctions, taxes, and money laundering rules, while the IMF wants to avoid having the project morph from technical solution to geopolitical tool.

Huobi Global, a major cryptocurrency exchange, has been facing rumors this week stemming from reports of employee arrests in mainland China, insolvency tied to Huobi’s reserves of Tether, and fraud allegations related to a USDT staking product with claims that a substantial amount of staked USDT being recycled into wallets held by Huobi and Justin Sun, Founder of Tron and adviser to Huobi. These allegations led to over $100 million in capital outflows across various blockchains and a capital injection of US$209 million worth of USDT and USDC that is rumored to be linked to Sun. The situation has sparked concerns about the exchange's stability and regulatory scrutiny in Hong Kong, where the company plans to apply for a virtual asset trading license under the city’s new crypto regime.

Latin America and the Caribbean

Image Credit: Petre_Barlea via Pixabay

Bitcoin adoption in El Salvador is neither going great nor is widespread according to an OpEd by a US graduate student who recently spent two-months in El Salvador. He observed that the average Salvadoran's perception of the digital currency's value as a medium of exchange remains uncertain, with anecdotes of everyday people still preferring cash or traditional bank transfer over Bitcoin. Additional challenges hindering widespread adoption and expanded use cases include the need for greater education about the value of Bitcoin, faster settlement times using layer 2 solutions like the Lightning Network, and convincing people that their future purchasing power is potentially safer in bitcoin than in cash.

The Brazilian state of Maranhão becomes the first state to join the Federal Government's Blockchain Brazil Network (RBB), aiming to enhance transparency, cost reduction, and security of public data. Maranhão's move towards the blockchain initiative aligns with the drive for greater transparency and efficiency in public services. The RBB, a layer 1 blockchain network based on a Proof-of-Authority (PoA) consensus mechanism, enables various authorized entities to create applications aimed at improving public services and decentralized finance, establishing a layer of trust in both public and private sectors.

Africa

Image Credit: EV via Unsplash

Kenyan police officers raided a Worldcoin cryptocurrency warehouse in Nairobi and seized machines and documents amid security concerns. The Kenyan government suspended Worldcoin's operations after the company offered free crypto tokens in exchange for iris scans and initiated an investigation into the company's activities, as its parent company, Tools for Humanity, allegedly failed to disclose its true intentions during registration. Despite Worldcoin's claims of not storing data, privacy experts are worried about sensitive information obtained from iris scans falling into wrong hands.

The National Information Technology Development Agency (NITDA) of Nigeria is planning to use blockchain technology for issuing National Youth Service Corps (NYSC) certificates to counter forgery. The NYSC certificate is one of the most sought-after certifications in the African country, as several employers, including government agencies, usually demand it as an employment criterion. NITDA's director general, Yusuf Kashafu, stated that the agency aims to collaborate with NYSC to create a secure and tamper-proof system utilizing blockchain's capabilities for certificate authentication.

Eastern Europe

Image Credit: Max Bender via Unsplash

Crypto payment processor CoinsPaid, a Ukrainian firm registered in Estonia, recently suffered a hack resulting in approximately $37.3 million in losses. Believed to be orchestrated by the North Korean Lazarus Group, the attackers employed various tactics, including social engineering, fishing, and posing as recruiters, to compromise CoinsPaid's infrastructure. Despite not compromising the private keys for its wallets, the firm suffered losses as most of the stolen funds were laundered and cashed out through various decentralized and centralized exchanges, highlighting the challenges of timely response and freezing criminal accounts for exchanges when such incidents occur, and the importance of exchanges improving digital hygiene and staff training to combat cybercrime.

Russia's digital ruble is anticipated to pose challenges for banks, including potential liquidity outflows, according to Sovcombank's First Deputy Chairman of the Board, Sergey Khotimsky, in a joint press conference with the Bank of Russia. Despite his concerns, Khotimsky believes banks will be able to find a balance and adapt to the changing situation. In the face of international sanctions pressure, the Bank of Russia recently announced that August 15th will be the start date for testing transactions with the digital ruble, marking a critical milestone for Russia's central bank and CBDC project.

Thanks for reading and have a great week ahead!

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Written by Jon Lira. Connect with him on LinkedIn.

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