⚖️CZ's Brazil Indictment,🖥️FTX Hacked By Russia,🌍USDC's Africa Expansion

October 14, 2023

Your 5 minute emerging markets web3 weekly update

In This Issue

Latin America and the Caribbean
🔸Binance CEO Changpeng Zhao May Be Indicted In Brazil
🔸Latin America's Growing Crypto Economy: Adoption, Challenges, and Unique Stories

Asia
🔸Binance Co-founder Addresses Compliance and Challenges in Public Letter
🔸China Unveils SIM Card-Based CBDC Wallet, Promises Secure Offline Payments

Eastern Europe
🔸Russian Cybercriminals Suspected in $400 Million Hack of Sam Bankman-Fried’s FTX: Report
🔸The Saint Petersburg Stock Exchange Poised to Pioneer Cryptocurrency Trading in Russia

Africa
🔸Fintech Unicorn, Flutterwave, Partners With Hedera to Expand USDC Payment Settlement in Africa
🔸Central Bank of Nigeria Dismisses eNaira CBDC Fears, IMF Urges Incentives for Wider Adoption

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Latin America and the Caribbean

Image Credit: Midjourney

A Brazilian congressional committee has recommended the indictment of four senior leaders of Binance, including its founder and CEO Changpeng Zhao, accusing them of fraudulent management, offering or trading in securities without authorization, and operating a financial institution without approval. Binance's Brazil unit is already facing scrutiny from Brazil's securities regulator over its tax compliance and sale of derivatives, which is considered a violation of securities market rules, and its proposed acquisition of Brazilian securities brokerage Sim;paul Investimentos, which is still pending approval. While the committee's suggestions have been made as part of an ongoing probe into crypto-related ponzi schemes in Brazil, the decision to proceed with indictments rests with Brazilian police.

Latin America possesses the seventh-largest cryptocurrency economy globally with three countries, Brazil (9), Argentina (15), and Mexico (16) ranking in the top 20 of Chainalysis' Global Crypto Adoption Index, showing strong grassroots adoption despite lagging behind in centralized exchanges and institutional activity. Venezuela stands out as a unique case, using crypto to resist oppression and deliver aid, highlighting the technology's potential to foster freedom in authoritarian regimes. Meanwhile, Argentina faces currency devaluation, driving strong crypto adoption, and Mexico stands out for its use of decentralized exchanges and cryptocurrency-based remittances, given its position as the world's second-largest receiver of remittances.

Asia

Image Credit: Midjourney

Binance Co-founder, Yi He, has published a public letter outlining the exchange's commitment to strict compliance measures and how the exchange takes compliance more seriously than many of its competitors. This statement appears to be a response to growing regulatory pressures, notably from the U.S. Department of Justice and the SEC. Binance is currently under investigation by the U.S. Department of Justice's national security division regarding potential violations of U.S. sanctions related to Russian customers, adding to previous regulatory challenges, including SEC charges. Additionally, Binance has recently announced the sale of its Russian operations to CommEX, citing alignment with its global compliance strategy as the reason for exiting the Russian market.

Chinese mobile carriers China Telecom and China Unicom, along with the Bank of China, are promoting a SIM card-based e-CNY (CBDC) payment service that allows users to make payments without an internet connection or battery power, and has been tested in various scenarios, including subway systems and universities. The Bank of China and the mobile carriers believe that the SIM card-based payment method offers improved safety and universality for e-CNY usage. This alternative payment method was introduced to address the challenge of low adoption of the official e-CNY app or digital currency wallet embedded in mobile apps.

Eastern Europe

Image Credit: Midjourney

Research firm Elliptic suggests that a portion of the $400 million stolen from FTX in November 2022 may have ties to Russian cybercriminal groups. A significant portion of the stolen funds, primarily in Ether, were moved to the Bitcoin blockchain and further processed through mixers to obscure their origins. Although the exact identity of the attackers remains unknown, Elliptic believes Russian-linked criminal groups, including ransomware gangs, darknet markets, and other intermediaries with connections in Russia were involved.

The Saint Petersburg Stock Exchange (SPB) is prepared to begin cryptocurrency trading once it becomes legally permissible in Russia, according to Roman Goryunov, the head of the exchange. He emphasized the importance of having cryptocurrency trading within the Russian infrastructure, rather than relying on foreign companies providing trading services in the Russian market. Goryunov expressed the exchange's eagerness to facilitate cryptocurrency trading during the Ural conference of the National Association of Stock Market Participants and noted that SPB had previously attempted to enter the cryptocurrency market in 2017.

Africa

Image Credit: Midjourney

Flutterwave, Africa's most valuable fintech unicorn, is partnering with the Hedera blockchain to introduce USDC payment settlements. While specific details have not been disclosed, the collaboration aims to enhance merchant settlements using USDC. Flutterwave is also expanding its cross-border remittance services in India and strengthening its operations in East Africa and North Africa after securing Electronic Money Issuer and Remittance Licenses in Rwanda, and a Payment Service Provider License in Egypt. Flutterwave is Africa's largest payment infrastructure has processed over 400 million transactions totaling more than $25 billion.

The Central Bank of Nigeria (CBN) has issued a press release denying claims that the eNaira Central Bank Digital Currency (CBDC) would pose a threat to the country's financial stability. The CBN clarified that these reports were based on misunderstandings and misinterpretations, particularly regarding the potential impact of CBDCs on traditional bank deposits and undermining the importance of commercial banks. The introduction of the eNaira was dismal and adoption has been sluggish, with the International Monetary Fund (IMF) recommending that the CBN utilize government aid programs, merchant payment systems, and more favorable foreign exchange rates for remittances to incentivize broader adoption of the eNaira.

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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