Značka: Our Man In Shanghai

Shanghai Man: AscendEX reopened after $80m hack, Huobi suffers key personnel departures, and government officials punished for mining activities

This weekly roundup of news from Mainland China, Taiwan, and Hong Kong attempts to curate the industry’s most important news, including influential projects, changes in the regulatory landscape, and enterprise blockchain integrations.  Limping out of 2021Last week we thought we had hit rock bottom for Chinese exchanges, as Bitmart was on the unfortunate end of a $150m hack. This week, it was more of the same, as AscendEX lost $80m to a similar style of theft affecting its Ethereum, BSC and Polygon hot wallet. On December 16, AscendEX released a security post-mortem detailing the attack:An in-depth security audit identified the breach as the result of an exploit of hardware-level vulnerability from third-party infrastructure utilized by AscendEX. The infiltration was carried out by highly sophisticated perpetrators. We have been working closely with law enforcement as well as blockchain forensic firms to gain further knowledge on the incident.Like Bitmart, AscendEX responded quickly, reassuring the community that their funds would be safe and accounted for, limiting the damage to its reputation. AscendEX, which was formerly known as BitMax, had done a relatively impressive job of attracting users around the globe and had just closed a $50 million Series B in November of 2021. That round included big names like Polychain Capital, Alameda Research, and Jump Capital, giving the exchange momentum to embrace a truly global growth strategy in the wake of suffocating Chinese regulations. Hard times at Huobi?On December 15, one of the longest-running exchanges restricted the accounts of millions of its Chinese users. Chinese users have until the end of December to access user-to-user OTC services, presumably so they have the option of cashing out prior to services being completely stopped. Most savvy users will likely find loopholes around regulations by withdrawing to on-chain wallets or exchanges with more flexible policies. Prior to Binance’s incredible growth during the ICO boom of 2017, Huobi had been the largest exchange in the world by volume and liquidity. Focusing on Chinese users, it had tried to work with local regulators first with offices in Beijing, as well as special innovation zones in Hainan and other parts of China. This strategy proved to be short-sighted after regulators took a zero-tolerance approach to crypto exchanges earlier this year, forcing the exchange to slowly eliminate services for Chinese traders. Huobi had little room to hide, as its ‘first-mover advantage’ made it too conspicuous to evade regulators. Chinese users trying to trade on their Huobi accounts were greeted with this message after December 15 when trying to trade or deposit fundsColin Wu wrote about the internal difficulties at Huobi, mentioning that COO Robin Zhu retired from management, while a number of other key members had left for other exchanges, including Bybit. One notable departure included the charismatic Head of Global Assets Ciara Sun. She had built her reputation in China on a combination of efficient business development and her trademark pictures with cats. ✨ Some personal news ✨After more than 2 years at @HuobiGlobal, I’m moving on to work on a new venture aimed at empowering the next generation of #Web3 and #metaverse apps.♥️More details to come but first, a quick thread 🧵 👇— Ciara Sun (@Crypto_Ciara) December 13, 2021Still, there might be room for the former-top exchange to rebound, as two weeks ago Huobi declared its new regional headquarters would be located in Singapore. This is an interesting choice considering Binance revealed on December 13 that it had abandoned plans to launch an exchange in Singapore. Although the island nation is noted for being progressive with its regulation, the process for acquiring licenses can be quite stringent, especially for Binance which was already targeted for rule-breaking by many policymakers. If Huobi is able to replace key management wisely, it could use its financial and strategic resources in Asia to begin taking back market share. Currently, Huobi sits fifth on FTX’s volume monitor, roughly the size of KuCoin and Bybit, but far behind its old rival OKEx. OKEx has been the biggest gainer of recent weeks, taking significant volume from Huobi and becoming the clear number two exchange in the world. Government officials in hot waterAn investigation from a national security inspection found that 34 state-owned enterprises have been active in cryptocurrency mining using state resources, including equipment and networks. Unspecified punishments were handed down to 48 people, including 21 party and government officers. A further 70 individuals were Interviewed and warned for failing to provide ample education on the issue.Adoption in Hong KongHong Kong had the fewest unengaged crypto owners of any developed market. Source: Visa18% of Hong Kong Residents are active cryptocurrency investors and 13% are passive investors, according to a new survey released by Visa on December 9. This was second only to the United States among the markets reviewed. This is unsurprising considering the amount of physical cryptocurrency store locations and companies that are set up in the special administrative region. The Visa survey collected 6,430 online responses from August 25 to September 13 in regions including Argentina, Australia, Brazil, Germany, Hong Kong, South Africa, the United States and the United Kingdom.

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Shanghai Man: Bitmart’s $150M theft, ‘Metaverse’ trending, Hong Kong mogul builds in The Sandbox

This weekly roundup of news from Mainland China, Taiwan, and Hong Kong attempts to curate the industry’s most important news, including influential projects, changes in the regulatory landscape, and enterprise blockchain integrations.  Bad news for EvergrandeEven after all the regulatory crackdowns, China isn’t letting 2021 slip away without a few more blows to the crypto markets. On December 9, the news revealed that massive real estate developer Evergrande had defaulted on its interest payments, and was thus subject to a credit rating downgrade. Subsequently, crypto markets dipped significantly, which will be worrying to investors who are already mumbling about jobless rates and new COVID variants. On the bright side, if the situation with Evergrande goes from bad to worse, financial regulators are going to have their hands full, giving them less time to focus on stamping out cryptocurrency as we approach the final month and a half of the lunar calendar. Bitmart bouncing backBitmart was the unfortunate victim of a large hack on December 5, when $150m was taken from an Ethereum and BSC hot wallet. CEO Sheldon Xia quickly jumped on Twitter and announced that the hot wallets carry only a small portion of the assets on Bitmart and that the exchange was conducting a comprehensive security review. 1/4 In response to this incident, BitMart has completed initial security checks and identified affected assets. This security breach was mainly caused by a stolen private key that had two of our hot wallets compromised. Other assets with BitMart are safe and unharmed.— Sheldon Xia (@sheldonbitmart) December 6, 2021While many Tier 2 exchanges might have been slow to react, to Bitmart’s credit, it communicated very frequently throughout. The following day, Xia returned to Twitter to announce that Bitmart’s other assets were secure and that the exchange would compensate affected users from its own funds. For an established exchange, this amount of loss wouldn’t be too crippling, especially if remaining users didn’t all withdraw at once. Immediately after the news, the Chinese community showed its resiliency. Rather than pile on misery, numerous voices spoke out in support, including competing exchanges like MEXC, KuCoin, and Coinex. Most of them left encouraging remarks on Twitter in addition to notices that they would work with Bitmart to identify and blacklist funds from the stolen account. Prominent investor Fenbushi Capital also voiced out their support, as did auditors Certik, Peckshield, and Hacken. Trust is the cornerstone we cherish. We applauded your team’s quick action to the incident, the high level of commitment. “The proper response, as Hanukkah teaches, is not to curse the darkness but to light a candle.” @BitMartExchange @sheldonbitmart https://t.co/qsquPg1IuL— Fenbushi Capital (@fenbushi) December 6, 2021Trending on social mediaSequoia Capital, one of the world’s largest venture capital firms with over $5 billion in AUM, overhauled its Twitter bio to crypto-native language on December 8. “Mainnet faucet. We help the daring buidl legendary DAOs from idea to token airdrop. LFG.”Shortly after, screenshots emerged of Sequoia Capital China’s head stating the firm was all-in on crypto. Feng Bo, who is a managing partner at Dragonfly Capital, had applauded the move noting its progressive approach. While it’s unlikely that a firm like Sequoia is actually all-in, it’s no secret that a lot of these large venture capital firms have enjoyed a lot of success through crypto-related investments in recent times. Perhaps the bigger question is which user was leaking screenshots from this seemingly private group chat for large Chinese whales. Despite all the fun, Sequoia changed its Twitter bio back the next day. Also very popular on Chinese crypto social media was the eloquent Brian Brooks from BitFury. Clips of his panel in the US Congress hearing on digital assets made the rounds, particularly as he explained the differences between Web 1.0, 2.0, and 3.0. The Chinese community seemed to appreciate his well-spoken and concise nature when dealing with the featureless politicians.For a bit of light humor, an image was circulating of CZ’s famous Tweet “If you can’t hold, you won’t be rich” stuck to the back of a Meituan food delivery vehicle. Meituan delivery is often memed as a low-paying form of employment that the crypto community members could be forced to return to when the industry is suffering, similar to McDonald’s in the west. It also pokes fun at a famous orange vehicle driven by an early Bitcoin whale in China that has the same message on the side door.An image of CZ’s famous Tweet stuck to a food delivery scooter indicates the current state of the marketsMad about the MetaverseMetaverse-related projects and events have been appearing left, right and center, all over China. However,  it’s not clear whether these are actually focused on building a Metaverse, or just a sneaky way for crypto projects to disguise themselves as something else to avoid the wrath of regulators. China’s Central Bank has caught on to this trend and are now monitoring the Metaverse and NFT space. Guidance or policies from the Central Bank are likely to resemble existing policies towards digital currencies, meaning strict regulations with little room for interpretation. Speaking at a financial security summit, the director of Anti-Money Laundering at the People’s Bank of China mentioned the Metaverse and NFTs when discussing the need to strengthen digital transaction monitoring. He also noted the need for regulatory sandboxes, a popular idea but one that would be unlikely to give much flexibility for truly decentralized products.These rumblings didn’t stop People’s Daily from adding “metaverse” to a list of 2021’s Top Ten trending words on December 8. Most of the other words were related to societal issues such as overworked students or young adults not attempting to compete and succeed. Metaverse stood out among the other words as one of the only ones related to technology and innovation. Over on the island in Hong Kong, Adrian Cheng, CEO of Hong Kong real estate giant New World Development, announced he was diving in by acquiring a prime piece of real estate in The Sandbox. Cheng announced that 10 different companies would be used to develop the virtual land, building up an innovation hub to show off developments from the areas of Hong Kong, Macau, and various Chinese cities located nearby. 

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Shanghai Man: CZ is wealthiest Chinese person with $90B, NFT yachts, and MonoX hacked

This weekly roundup of news from Mainland China, Taiwan, and Hong Kong attempts to curate the industry’s most important news, including influential projects, changes in the regulatory landscape, and enterprise blockchain integrations.  Top of the food chainThis probably won’t come as a surprise to anyone in the crypto industry, but Binance founder CZ has been crowned the richest Chinese person in the world. The list appeared in Caijing Magazine, a financial publication based in Beijing. CZ was credited as having a net worth of around $90 billion, a huge jump over former richest Chinese man Zhong Shanshan, a bottled water mogul worth around $66 billion. CZ’s source of wealth was listed as Binance, a company that has not seen eye-to-eye with Chinese regulators, and is now often banned by internet search engines within the country. In fact, many average citizens in China have probably never heard of CZ prior to seeing this list. Interestingly, CZ’s location was listed as Singapore, making him the only person in the Top Five not based in China. Ironically, being on this list probably isn’t something to celebrate for the people in China as this year has seen a harsh crackdown on the super-wealthy.  Who? Most Chinese citizens will be seeing CZ’s name for the first time. Source: Caijing MagazineRounding out the top five rich list included the founder of Bytedance and TikTok, an electric car battery maker, and Pony Ma, the founder of Tencent. The real question should be which other early crypto whales from China might be hovering on the fringes of this list, even if their wealth is not publicly known. Media company BlockBeats posted a photo of CZ from 4 years ago, as Binance was beginning to take shape. The photo from Shanghai showed a number of early team members posing in an office building hallway, long before the organization swelled to thousands of members and Binance became such a powerhouse in the Fintech space. Also pictured was a young Vitalik Buterin, who was singing Chinese karaoke songs while raising investment for Ethereum. These pictures are proof that four years in crypto can be very rewarding, but also can age a person tremendously.Four years ago, CZ of #Binance was busy getting investment. Ethereum’s @VitalikButerin sings Chinese songs in China.At that time, No one will know that @cz_binance will become the richest man in China and #Ethereum will have such a big impact on the world. pic.twitter.com/hwKX1FZRKJ— BlockBeats (@BlockBeatsChina) December 1, 2021Future of SocialFi is English onlyMonaco was the headline-grabbing project of the week, with the decentralized social network teasing users with the hint of a lucrative airdrop. Inviting users, gaining followers, and getting likes were ways for users to increase their allocation in the airdrop, along with ownership of cartoon yacht NFTs from Opensea. This naturally caused a flurry of users signing up and sharing their invite codes throughout Chinese crypto channels on social media. After signing up, pornographic and sexually explicit content became an easy way for users to farm follows and likes, causing one user to point out that instead of SocialFi the platform should be categorized as PornFi. The big twist was when Monaco announced on Twitter that only English content would be counted towards content mining:“Please be aware only English content will be counted as content mining, and content quality is a key aspect for content mining measurement as well. Spamming and advertising follows without any organic creation WILL NOT be counted into content mining”This received over 500 comments on Twitter, with many Chinese users reacting angrily. Another twist was soon revealed as a user pointed out that the codebase returned error messages in Chinese. A Whois database search even revealed that the company had been registered in Beijing, further amusing users, or in some cases, infuriating them. Yacht parties galore: Monaco users get to show off their colorful NFTs on social media. Source: OpenseaDespite the early PR difficulties, Monaco is shaping up to be an interesting player in the SocialFi scene. Backed by the famously shrewed Three Arrows Capital, the social media network allow users to sign up and show off their NFT collection just by using a MetaMask wallet. With the amount of publicity Metaverse and SocialFi applications are getting around the world, Monaco might be able to leverage clever tokenomics and a smooth user experience to carve out an active user base.Headlines from Huobi On November 30, Huobi founder Du Jun told Bloomberg that Huobi Group has chosen Singapore as its regional headquarters. After leaving China, it’s been a bumpy road for the storied exchange. On November 25, Huobi launched MonoX Finance’s MONO token on Huobi Primelist, a launchpad for new tokens. Five days later, the MonoX smart contract platform was hacked for $31 million dollars worth of ETH and other tokens. Needless to say, new MONO buyers on Huobi wont be happy to see the token price lose over 30% in the first week of existence. 

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