Digestible news on the latest developments across the fields of Web3, NFT, blockchain and metaverse in China and beyond, collected for you every week by Pandaily.
This week: Babel Finance lost $280 million trading client funds, Binance CEO sues Bloomberg’s Hong Kong publisher for defamation, NFT black market swells amid China’s crypto crackdown, and more.
Babel Finance lost $280 million trading customer funds
Babel Finance, the troubled Hong Kong crypto lender that abruptly suspended withdrawals last month amid a widespread crypto market crash, has reportedly suffered heavy losses due to proprietary trading of customer funds. The Block and CoinDesk first reported the story.
- The firm lost about 8,000 bitcoin and 56,000 ether in June in forced liquidations during a crypto market crash that sent the price of bitcoin below $20,000.
- Babel Finance was one of many crypto companies that were severely affected by the market contagion in June. The decision to halt withdrawals came after Celcius Network, a blockchain-based financial services provider, and Voyager Digital, a crypto investment app, with hedge fund Three Arrow Capital also received margin calls from several lenders.
- “In the volatile week of June when BTC fell sharply from 30k to 20k, unhedged positions in [proprietary trading] accounts racked up significant losses, which directly led to the forced liquidation of several trading accounts and wiped out ~8,000 BTC and ~56,000 ETH,” according to a restructuring deck issued by the company.
- The company is trying to convert hundreds of millions of dollars in debt into equity to obtain a revolving credit facility to raise funds. (The Block, CoinDesk)
READ MORE: Read all our articles on Babel Finance!
Binance CEO sues Bloomberg’s Hong Kong publisher for defamation
Binance CEO Changpeng Zhao on Monday filed a lawsuit against Modern Media CL, Bloomberg Businessweek’s Hong Kong publisher, claiming defamation over an article accusing the exchange of running a “ponzi scheme.” CoinDesk and Cointelegraph first reported the story.
- On June 23, Bloomberg Businessweek published a profile of Zhao: “Can Crypto’s Richest Man Stand the Cold?” In Hong Kong, however, Modern Media published a Chinese article with a different headline: “Zhao Changpeng’s Ponzi Scheme”.
- The headline, according to Zhao’s representative, was designed to incite “hatred, contempt and ridicule” for the CEO.
- Zhao asked for the issue to be removed from newsstands and for a restraining order to stop the publisher from committing the message.
- The CEO also filed a motion for discovery — a legal request asking the court to mandate that opposing counsel and the party turn over a given material or information — against Bloomberg LP and Bloomberg Inc. in the US District Court for the Southern District of New York.
- This is not the first time Zhao and Binance have sued the media. In 2020, Binance sued Forbes for allegedly defamatory statements, but dropped the case last year.
- Modern Media is an independent entity that licenses Bloomberg’s content. Zhao’s filing is a personal matter and has nothing to do with the exchange or the company, as confirmed by Binance when contacted by Cointelegraph. (CoinDesk, Cointelegraph)
RELATED: Read all our content on Binance!
NFT black market surges amid China’s crypto crackdown
Traders have started turning to off-the-books transactions of used NFTs amid China’s regulatory crackdown on crypto and secondary trading of digital assets. Nikkei Asia first reported this story.
- In July, a blockchain platform powered by Ant Group, Alibaba The group’s fintech arm began selling digital collectibles inspired by traditional headdresses of Miao people, a Chinese ethnic minority.
- A total of 10,000 were launched at 18 yuan ($2.66) each. They immediately sold out as a rush of buyers gobbled up the system.
- China has issued a blanket ban on crypto trading and mining since last September due to potential risks of speculation and money laundering. In response to these concerns, many Chinese tech companies have launched digital collectibles (digital assets that can only be purchased with the Chinese yuan) and blocked the resale of the collectibles on their respective platforms.
- In June, technology giants including Tencent Holdings and Ant Group signed a pact to stop secondary trading of digital collectibles and “self-regulate” their activities in the market, as reported by Chinese state media.
- However, more than a few services allow users to transfer ownership of digital assets, seemingly without money changing hands. This creates opportunities for a separate industry to emerge, where platforms can match sellers of digital collectibles with potential buyers. (Nikki Asia)
Hong Kong University of Science and Technology launches VR course ahead of Metaverse Campus launch
The Hong Kong University of Science and Technology (HKUST), one of the world’s top research institutions, has announced the launch of a virtual reality classroom in an effort to create a digital campus in the metaverse. SCMP first reported this story.
- The VR classroom will also host the opening of HKUST’s Guangzhou campus on September 1, an academic at the institution told SCMP.
- “Many guests may be overseas and unable to attend [the opening]so we will host it in the metaverse,” said Pan Hui, a professor of computational media and art at the Guangzhou campus.
- The virtual classroom is part of a larger plan to build MetaHKUST, a virtual campus that connects the school’s campuses in Hong Kong and Guangzhou, allowing students and professors to interact with each other without geographical limitations.
- “[Using Zoom] feels like you’re just looking at a 2D screen. But through virtual reality, you can feel as if you are there. I think interaction is very important for learning. How you interact with students around you will increase your learning outcomes, the professor said.
- In addition to taking classes in the metaverse, students also have the opportunity to attend opening days and even commencement in the virtual space, while receiving diplomas and transcripts in the form of NFTs. (SCMP)
Tether says it does not contain Chinese commercial papers
Tether Holdings Ltd., the company behind the world’s largest stablecoin, said its portfolio of reserves does not include Chinese commercial paper. Bloomberg and The Wall Street Journal first reported the story.
- Tether said in a blog post on Wednesday that it has reduced its exposure to certificates to about $3.7 billion from $30 billion in July 2021.
- The company said it plans to further reduce its certificate holdings to about $200 million by the end of August, and to zero by early November at the latest.
- Tether Holdings Ltd., issues and operates the US dollar-pegged token USDT. In June, the company refuted speculation that 85% of the token was backed by Chinese or Asian commercial paper. It has also steadily increased its exposure to US Treasury bills since then.
- There is evidence that Tether’s reserves included short-term loans to large Chinese companies, according to Bloomberg.
- Some short sellers have said they believe most of Tether’s commercial paper holdings are backed by debt-laden Chinese real estate developers, according to an earlier report by The Wall Street Journal.
- While designed to maintain a stable value pegged to the dollar, the peg fell as low as 94 cents during the crypto market crash in May. (Bloomberg, The Wall Street Journal)
Dubai Police launches second round of NFTs
Dubai Police is launching a second round of NFTs, becoming the first government entity in the UAE to use blockchain technology in the fields of security and strategic communications. Forkast first reported the story.
- An official spokesperson said the second batch of the NFTs will be launched in October via GITEX, a meeting platform aimed at clients in the technology industry.
- The move is in line with the government’s growing interest in digital assets, as “NFT-related information documented on a blockchain cannot be forged or copied at all,” said Brigadier General Khalid Nasser Al Razooqi, director of the General Department of Artificial Intelligence at Dubai Police .
- 150 new NFTs will be made available for free on Dubai Police’s social media platforms to participants who provide their digital wallet address.
- As many as 22.91 million people worldwide have shown interest in getting the police department’s first batch of NFTs.
- Al Razooqi further said that Dubai Police had received more than 7,000 direct messages from participants on its social media platforms. (Rejection)
That’s it for this week’s newsletter – thanks for reading! As always, we welcome feedback on how we can make this newsletter better. Write to us at [email protected]. See you again next week!