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Our weekly roundup of news from East Asia curates the industry’s most important developments.

Boyaa Interactive International, a publicly traded Hong Kong holding company specializing in online card and board games, wants to secure the approval of its shareholders to invest $100 million in crypto.

According to this week’s announcement, Boyaa Interactive directors want to allocate $45 million of corporate funds to Bitcoin (BTC), $45 million to Ether (ETH), and $10 million to stablecoins such as Tether (USDT) and USD Coin (USDC). As for rationales for the investment, the directors wrote:

“The Internet gaming business mainly operated by the Group has a high degree of logical fit with Web3 technology. It attaches great importance to communities and users, covers virtual asset attributes and other characteristics, making Web3 technology easier and more widely used in the Internet gaming industry.”

The company’s brand of 75 online games, such as its Texas Hold’em casino, has around 1.18 million daily active players. In Q3 2023, Boyaa Interactive generated $14 million in revenue and $4.2 million in earnings, respectively. 

Some think that bots in games is a sign of the apocalypse, or perhaps just the makers trying to fill up an empty venue to make it look popular.

But Pixels founder and CEO Luke Barwikowski says that conversely, if people aren’t trying to fill your game with bots, then it’s probably because the game isn’t exactly the talk of the town.

“If people aren’t trying to bot your game — it’s not because they can’t — it’s because they don’t care enough to do it.”

According to Barwikowski, if you’re making a game that doesn’t have any bots and flaunting it, that’s not something to boast about.

“It’s not always the flex you think to say you don’t have any bots in an ecosystem,” he declares.

Real bipartisan legislative efforts are rare in Washington, DC, these days, but Democratic Senators Elizabeth Warren and Joe Manchin and Republican Senators Lindsey Graham and Roger Marshall have managed to come together to co-sponsor a bill focused on crypto crime. 

According to the senators, the Digital Asset Anti-Money Laundering Act of 2023 aims to close loopholes in the nation’s Anti-Money Laundering rules. The bill would amend the Bank Secrecy Act and would designate a diverse range of digital asset providers as financial institutions. 

The Bank Secrecy Act establishes program, recordkeeping and reporting requirements for national banks, federal savings associations, federal branches and agencies of foreign banks. Digital asset providers would be required to adhere to many of the same regulations as traditional banks.

Warren introduced the legislation to the United States Senate on July 27, 2023, on behalf of herself and Senators Joe Manchin, Roger Marshall and Lindsey Graham. The bill was then referred to the Senate Committee on Banking, Housing and Urban Affairs. It hasn’t been voted on by the entire Senate or sent to the U.S. House of Representatives for consideration. Nor has President Biden signed it, and it is not a matter of law at this time. 

The legislation would add several types of cryptocurrency providers to U.S. regulators’ list of financial institutions. These include unhosted wallet providers, digital asset miners and validators or other nodes that validate third-party transactions, miner extractable value searchers, other validators or network participants with control over network protocols, or just about anyone else who facilitates or provides services related to exchange, sale, custody or lending of digital assets.

The former president of FTX US dishes the dirt on his falling out with former Jane Street colleague Sam Bankman-Fried and predicts the spot Bitcoin ETF will far outshine the record-breaking success of the Bitcoin Futures ETF.

The ex-president of FTX US, Brett Harrison, tells Magazine that he didn’t say a single word to Sam Bankman-Fried during the two-month notice period after he resigned, which was only months before the whole exchange blew up. Even getting a message to SBF to say he was resigning in the first place was hard work.

“I had to talk to other people in the company to formally resign. I wrote one text to Sam and I got back a single heart emoji. That was the last I heard from him,” Harrison declares.

Harrison and Bankman-Fried had been colleagues years earlier at quantitative trading firm Jane Street, where Harrison saw his potential while teaching SBF in a course on programming for traders. But things went south real quick between them at FTX.

Harrison claims it was due to Bankman-Fried’s inflated ego and his reluctance to accept any feedback or advice.

Asset manager Pando Asset has become an unexpected late entrant into the spot Bitcoin ETF race in the United States. On Nov. 29, Pando submitted a Form S-1 — used to register securities with the agency — to the U.S. Securities and Exchange Commission for the Pando Asset Spot Bitcoin Trust. Like other ETF bids, the trust aims to track Bitcoin’s price with the custody arm of the crypto exchange Coinbase to hold Bitcoin on behalf of the trust. Pando is the 13th applicant for an approved spot Bitcoin ETF in the U.S. and joins the race with a dozen others, including BlackRock, ARK Invest and Grayscale.

Crypto exchange Binance is winding down the services for its native stablecoin, Binance USD (BUSD). According to an announcement, the exchange will cease support for all BUSD products following Paxos halting the minting of new coins. Binance said users should withdraw or convert their existing BUSD into other assets before Dec. 15, prior to it beginning the process of disabling withdrawals for BUSD on Dec. 31. At that point, existing balances will automatically be converted into First Digital USD for certain users.

The demand of institutional investors for Bitcoin (BTC) became evident on Nov. 10 as the Chicago Mercantile Exchange (CME) Bitcoin futures flipped Binance’s BTC futures markets in terms of size. According to BTC derivatives metrics, those investors are showing strong confidence in Bitcoin’s potential to break above the $40,000 mark in the short term. CME’s current Bitcoin futures open interest stands at $4.35 billion, the highest since November 2021, when Bitcoin hit its all-time high of $69,000 — a clear indication of heightened interest. The impressive 125% surge in CME’s BTC futures open interest from $1.93 billion in mid-October is undoubtedly tied to the anticipation of the approval of a spot Bitcoin exchange-traded fund.

With ChatGPT, OpenAI has developed the most popular artificial intelligence tool in the world. It was launched a year ago, on Nov. 30, 2022, and catapulted to 100 million monthly users within its first three months. In just 12 months, ChatGPT’s existence has contributed to narratives surrounding the extinction of humankind, accusations that OpenAI built it by allegedly committing mass-scale copyright infringement, and a tumultuous CEO firing and rehiring that pundits are still trying to understand.

Wallets linked to defunct crypto trading firms FTX and Alameda Research moved $10.8 million to accounts in Binance, Coinbase and Wintermute using eight cryptocurrencies. Blockchain analysis firm Spot On Chain spotted the movement, estimating that the defunct entities have transferred $551 million since Oct. 24 using 59 different cryptocurrency tokens. The funds’ movement dates back to March, when FTX and Alameda began the process of recovering assets for investors.

We’re rolling out genuine use cases for AI and crypto each day this week — including reasons why you shouldn’t necessarily believe the hype. Today get two for the price of one: Blockchain based AI marketplaces, and financial analysis.

It may not seem like the most exciting use case blending AI and crypto, but both Near co-founder Illia Polosukhin and Framework Ventures founder Vance Spencer cite blockchain-based marketplaces that source data and compute for AI as their top pick.  

AI is an incredibly fast-growing industry requiring ever-increasing amounts of computing power. Microsoft alone is reportedly investing $50 billion into data center infrastructure in 2024 just to handle demand. AI also needs enormous amounts of raw data and training data, labeled into categories by humans.

Polosukhin believes decentralized blockchain-based marketplaces are the ideal solution to help crowdsource the required hardware and data. 

“You can use [blockchain] to build more effective marketplaces that are more equal,” he tells Magazine, explaining that AI projects currently need to negotiate with one or two big cloud providers like Amazon Web Services. Still, it’s difficult to access the required capacity due to a shortage of Nvidia’s A100 graphical processing units. 

Our weekly roundup of news from East Asia curates the industry’s most important developments.

Scammers posing as investment experts allegedly enticed 145 victims to tip $18.9 million into the unlicensed Hong Kong crypto exchange Hounax.

According to reports earlier this week, the police said investors were allegedly promised up to 40% return per annum with “no risk” in its advertisements. After users deposited their funds, they were unable to withdraw them. On Nov. 1, the Securities & Futures Exchange (SFC) of Hong Kong listed Hounax on its billboard of suspicious crypto exchanges but clarified that because Hounax was unlicensed at the time of the incident, it was not subjected to the regulator’s enforcement actions.

This was the second scandal involving a crypto exchange in Hong Kong in recent months. In September, another unlicensed exchange, JPEX collapsed after allegations of a Ponzi scheme unsurfaced, leading to 66 arrests and an estimated $205 million in investors’ losses.

Despite the scandals, Hong Kong regulators appear to remain steadfast in their commitment to transforming the city into a major Web3 hub. On Nov. 27, SFC CEO Julia Leung explained that “even if the grace period ends tomorrow, fraud will still occur, so there is no intention to modify the grace period and other measures for the time being.”

We’re rolling out one genuine use case for AI and crypto each day this week — including reasons why you shouldn’t necessarily believe the hype. Today: How blockchain can fight the fakes.

Generative AI is extremely good at generating fake photos, fake letters, fake bills, fake conversations — fake everything. Near co-founder Illia Polosukhin warns that soon, we won’t know which content to trust.

“If we don’t solve this reputation and authentication of content (problem), shit will get really weird,” Polosukhin explains. “You’ll get phone calls, and you’ll think this is from somebody you know, but it’s not.”

“All the images you see, all the content, the books will be (suspect). Imagine a history book that kids are studying, and literally every kid has seen a different textbook — and it’s trying to affect them in a specific way.”

Blockchain can be used to transparently trace the provenance of online content so that users can distinguish between genuine content and AI-generated images. But it won’t sort out truth from lies.

Pudgy Penguins minted in July 2021, but quickly saw high drama after its former founder came under suspicion he was going to rug the project. 

A few months later Luca Schnetzler stepped in. With an entrepreneurial streak since his early teens he had a history of building internet businesses and bought the project and its intellectual property of 8,888 cute little Pudgys for $2.5 million in April 2022. 

“It was an instinct and intuitive decision. I saw this thing that I was hugely invested in before I bought it that I thought had all of the potential. I was complaining and crying on a daily basis to the founders about how they sucked, and how they could do better. Rather than just doing that, I just stepped up to the plate,” Schnetlzer says.

The narrative of quickly shifted from a rug that could trend to zero to one of hope and optimism when Schnetzler set out a vision for the project the community could rally behind. 

Schnetzler became one of the standout PFP project leaders during the NFT bear market, and the Penguins bucked the trend of cratering floor prices. Since he took over as CEO, the Pudgy Penguins floor has risen from around the 1 ETH mark to 6.32 ETH. Holders and the wider NFT community believe that Schnetzler has a game plan for success and the ability to execute it. 

In one of those storms in a teacup that’s impossible to imagine occurring before the invention of Twitter, social media users got very upset that ChatGPT refused to say racial slurs even after being given a very good — but entirely hypothetical and totally unrealistic — reason.

User TedFrank posed a hypothetical trolley problem scenario to ChatGPT (the free 3.5 model) in which it could save “one billion white people from a painful death” simply by saying a racial slur so quietly that no one could hear it. 

It wouldn’t agree to do so, which X owner Elon Musk said was deeply concerning and a result of the “woke mind virus” being deeply ingrained into the AI. He retweeted the post, stating: “This is a major problem.”

Another user tried out a similar hypothetical that would save all the children on Earth in exchange for a slur, but ChatGPT refused, saying:

“I cannot condone the use of racial slurs as promoting such language goes against ethical principles.”

Every day this week we’re highlighting one genuine, no bullsh*t, hype free use case for AI in crypto. Today it’s the potential for using AI for smart contract auditing and cybersecurity, we’re so near and yet so far.

One of the big use cases for AI and crypto in the future is in auditing smart contracts and identifying cybersecurity holes. There’s only one problem — at the moment, GPT-4 sucks at it.

Coinbase tried out ChatGPT’s capabilities for automated token security reviews earlier this year, and in 25% of cases, it wrongly classified high-risk tokens as low-risk. 
James Edwards, the lead maintainer for cybersecurity investigator Librehash, believes OpenAI isn’t keen on having the bot used for tasks like this. 

“I strongly believe that OpenAI has quietly nerfed some of the bot’s capabilities when it comes to smart contracts for the sake of not having folks rely on their bot explicitly to draw up a deployable smart contract,” he says, explaining that OpenAI likely doesn’t want to be held responsible for any vulnerabilities or exploits.

This isn’t to say AI has zero capabilities when it comes to smart contracts. AI Eye spoke with Melbourne digital artist Rhett Mankind back in May. He knew nothing at all about creating smart contracts, but through trial and error and numerous rewrites, was able to get ChatGPT to create a memecoin called Turbo that went on to hit a $100 million market cap. 

For every genuine blockchain project harnessing artificial intelligence there are 100 coins trading off the hype.

Magazine spoke with Near founder Illia Polosukhin, Framework Ventures founder Vance Spencer, MakerDAO founder Rune Christensen, Richard Ma from Quantstamp, Ralf Kubli from Casper and others to explore some of the key hype-free, genuine use cases for AI in crypto and blockchain.

We’re rolling out one genuine use case for AI in crypto each day this week — including reasons why you shouldn’t necessarily believe the hype.

Decentralized autonomous organizations, as they exist today, are something of a fraud. As Framework Ventures founder Vance Spencer points out, they are “not actually autonomous. There’s a bunch of people in the middle.“

“It just seems like AI is really our only way to actually make the DAO concept work,” he says. 

For every genuine blockchain project harnessing artificial intelligence in an attempt to create a better world — like Dr Ben Goertzel’s Singularity.net — there are 100 coins like AI Doge that have simply wedged the hyped-up terms “AI” and “Crypto” together to flog tokens.

“Those are just fundamental buzzwords,” explains Near blockchain founder Illia Polosukhin, who worked on the groundbreaking “Attention Is All You Need” research that led to large language models like ChatGPT and Claude.

As one of the few people in the world who are as well versed in AI as they are in crypto, Polosukhin says that if you ignore the hype, the technologies really are a good fit.

“There’s a lot of specific things both in AI and Web3 that can use each other or benefit each other,” he says.

Magazine spoke with Polosukhin, Framework Ventures founder Vance Spencer, MakerDAO founder Rune Christensen, Richard Ma from Quantstamp, Ralf Kubli from Casper and others to examine some of the key hype-free, genuine use cases for AI in crypto and blockchain. 

Binance and its co-founder, Changpeng “CZ” Zhao, have reached a settlement over criminal and civil cases with the United States Department of Justice. CZ will plead guilty to one felony charge as part of the negotiated agreement. Attorney General Merrick Garland announced the settlement, claiming Binance’s policies allowed criminals involved in illicit activities to move “stolen funds” through the exchange. As part of the settlement, CZ announced on X (formerly Twitter) that he had stepped down as CEO and that Binance’s global head of regional markets, Richard Teng, will assume the position. He added he was “proud to point out” that U.S. officials didn’t allege that Binance misappropriated funds or manipulated markets. CZ was released on bail and is battling government efforts to bar his return to the United Arab Emirates to be with his family. His sentencing is scheduled for February.

Representatives from BlackRock and Nasdaq met with the U.S. Securities and Exchange Commission (SEC) to discuss the proposed rule allowing the listing of a spot Bitcoin exchange-traded fund (ETF). BlackRock provided a presentation detailing how the firm could use an in-kind or in-cash redemption model for its iShares Bitcoin Trust. Many reports have suggested the SEC could be nearing a decision on a spot BTC ETF for listing on U.S. markets. SEC officials also met with Grayscale representatives this week to discuss the listing of a Bitcoin ETF. BlackRock is one of many firms with spot crypto ETF applications in the SEC pipeline awaiting a response, including Fidelity, WisdomTree, Invesco Galaxy, Valkyrie, VanEck and Bitwise.

A Bitcoin user paid $3.1 million in fees for transferring 139.42 BTC. The transaction fee is the eighth-highest in Bitcoin’s 14-year history. A wallet address tried transferring 139.42 BTC only to pay more than half the actual value of the transaction fee. The destination address received only 55.77 BTC. The mining pool Antpool captured the absurdly high mining fee on block 818087. This is the largest Bitcoin transaction fee ever paid in dollar terms, knocking off Paxos’s September transfer of $500,000.

The U.S. Securities and Exchange Commission has sued Kraken, alleging it commingled customer funds and failed to register with the regulator as a securities exchange, broker, dealer and clearing agency. Additionally, the SEC alleged Kraken’s business practices and “deficient” internal controls saw the exchange commingle up to $33 billion worth of customer assets with its own. The SEC said this resulted in a “significant risk of loss” for its clients. In a follow-up blog post, Kraken said the SEC’s commingling accusations were “no more than Kraken spending fees it has already earned,” and the regulator doesn’t allege any user funds are missing.

Sam Bankman-Fried will stay jailed after failing to convince a United States appellate court that he should be freed while his legal team appeals his conviction. Government prosecutors accused Bankman-Fried of leaking Caroline Ellison’s journals to The New York Times in July, which caused his bail to be revoked by a New York District Court. Bankman-Fried was found guilty of seven fraud and money laundering-related charges on Nov. 2. The former FTX CEO will remain behind bars while he awaits his sentencing on March 28 next year.

Our weekly roundup of news from East Asia curates the industry’s most important developments.

In the fourth hack affecting the HTX (formerly Huobi Global) ecosystem in just two months, the exchange lost $30 million via a hot wallet hack that occurred on Nov. 22. The amount was updated from original reports of $13.6M. 

In its Nov. 23 announcement, the exchange promised to “fully compensate for the losses caused by this attack and 100% guarantee the safety of user funds,” as well as restore services within 24 hours of the attack. The day prior, the HTX Eco Chain (HECO) bridge was exploited for $86.6 million. An investigation is ongoing. 

In September, the HTX exchange was hacked for $7.9 million; this was followed by a $100 million hack against the Poloniex exchange, a related entity, in November. Justin Sun, the Chinese blockchain personality and de-facto owner of HTX (not to mention an “adviser” to, but possibly owner of, Poloniex, founder of Tron and CEO of BitTorrent etc),stated after the attack that “HTX Will Fully Compensate for HTX’s hot wallet Losses. Deposits and Withdrawals Temporarily Suspended. All Funds in HTX Are Secure.” Sun previously also madeassurancesthat “all user assets are #SAFU” in the aftermath of the September hack against HTX.

Huobirebranded to HTXduring this year’s Singapore2049 event in September. Although its executives have repeatedly reassured that the exchange is doing well, the exchange ran into a number ofserious incidentsthis year, including analleged employee revolt.

As the year winds down, every gaming company and its dog are dropping year-in-review reports.

A recent report from blockchain gaming accelerator Game7 suggests that many game developers had an enforced nap instead of pumping out new games.

This year, just 223 Web3 games were launched which is a 65% drop from the 640 games launched in 2022, and even more distant from the 811 games launched in 2021.

So what’s the deal with the sudden nosedive in output?

Well, the optimistic answer is Rome wasn’t built in a day.

Although documented statistics about cryptocurrency trading and substance abuse are hard to come by, addiction experts are treating an increasing number of crypto traders.

Abdullah Boulard, founder and CEO at The Balance Luxury Rehab, tells Magazine that a number of crypto traders struggle with substance abuse. “Our client base is diverse, but this is a unique demographic that we’ve seen an increase in over the recent years,” Boulard says. 

According to Boulard, the high intensity of cryptocurrency trading combined with 24/7 accessibility encourages some to use stimulants to keep up the pace. “Substances like amphetamines, cocaine and even excessive caffeine use are common among these individuals,” says Boulard. 

Caroline Ellison, the former CEO of Alameda Research, tweeted about the use of stimulants in April 2021.

New York Magazine subsequently reported that a successful trader who met with Ellison commented about her use of stimulants and their overall effects on members of the community. “Crypto really fucked with a lot of people’s perceptions of money. A lot of stuff doesn’t feel real. And if you add speed …”

Prior to that, in September 2019, the former CEO of disgraced cryptocurrency exchange FTX, Sam Bankman-Fried, tweeted about his use of stimulants and sleeping pills.

Dominic Frisby recalls meeting MicroStrategy’s Michael Saylor for the first time at a crypto event. What started off as an awe-struck moment became confusing after things took an unexpected turn.

“I saw Michael Saylor there. I was like, ‘Wow, that’s him!’” he tells Magazine. But it was Saylor who quickly came over and introduced himself before Frisby had a chance:

“He just came up to me and said, ‘I’ve seen some of your videos, and I really like your work and what you’re doing. Would you like to come over to dinner?’”

Frisby explains he was thrilled to be hanging with the OG Bitcoin maxi in Saylor’s house, which is “much nicer” than his own.

“Every time I watch a Michael Saylor video, I get orange pilled. The guy is so clever,” he declares.

Umami Labs CEO Alex O’Donnell grew up on the outskirts of Philadelphia before attending Temple University to study literature and economics. That path led him to devote seven years of his life as a financial journalist at Reuters, where he specialized in M&As IPOs.

He said his academic focus created a “pretty natural synthesis” when it came ot financial journalism. However, he said he became “disenchanted” with his industry while he was cooped up at home during the Covid-19 pandemic. “There really was a three-way alliance between journalists, government officials and technology companies trying to control the flow of information,” O’Donnell said in an interview with Cointelegraph.

He began tinkering with cryptocurrency, which led to his introduction with Umami DAO — and ultimately his creation of Umami Labs.

O’Donnell and his wife, Sanjana, are preparing for a “third, smaller person” to join their family next year. In the meantime, he said he’s also gearing up for another crypto-related venture. The details aren’t fully public yet, but he said he plans to release more information the months ahead.

I’d been a journalist for the better part of a decade primarily covering mergers and acquisitions. I always had an interest in finance and tech. But I started becoming a bit disenchanted with the mainstream media around the time of the pandemic. That was the first time I started becoming a bit more cynical about my own industry’s role in the information economy. So I started paying more attention to issues like privacy, censorship and other things I had not taken as much interest in before.

ChatGPT developer OpenAI removed founder Sam Altman from his CEO position on Nov. 17. Chief technology officer Mira Murati is now serving as interim CEO. According to a blog post, the board of directors engaged in a “deliberative review process,” which resulted in the conclusion that Altman “was not consistently candid in his communications with the board, hindering its ability to exercise its responsibilities.” Shortly after, OpenAI co-founder and president Greg Brockman revealed his exit from the organization.

The world’s largest asset manager, BlackRock, officially filed for a spot Ether exchange-traded fund (ETF) with the United States Securities and Exchange Commission (SEC) on Nov. 15. The ETF, dubbed the iShares Ethereum Trust, aims to “reflect generally the performance of the price of Ether,” according to the S-1 filed with the SEC. The iShares brand is associated with BlackRock’s ETF products. The move by BlackRock comes nearly a week after it registered the iShares Ethereum Trust with Delaware’s Division of Corporations and almost six months after it filed its spot Bitcoin ETF application. Following BlackRock’s filing, asset manager Fidelity also sought a green light for its own Ether ETF.

The Australian Taxation Office (ATO) has issued guidance on capital gains tax (CGT) treatment with regard to decentralized finance and wrapping crypto tokens for individuals, confirming that Australians are liable for capital gains taxes when wrapping and unwrapping tokens. The transfer of crypto assets to an address that the sender does not control or that already holds a balance will be regarded as a taxable CGT event, the ATO said in its statement. The CGT event will trigger depending on whether the individual recorded a capital gain or loss. A similar approach has been considered for taxing liquidity pool users, providers and DeFi interest and rewards. In addition, wrapping and unwrapping tokens will also be subject to triggering a CGT event.

An employee of FTX’s charity wing recruited by Sam Bankman-Fried is trying to get paid $275,000, the remainder of his claimed 2022 salary bonus. Ross Rheingans-Yoo’s lawyers argued in a court filing that only $375,000 of his $650,000 bonus was paid by FTX. They claim the remaining funds were owed when the crypto exchange filed for bankruptcy in November 2022. The fate of Rheingans-Yoo’s bonus will be determined by a Delaware bankruptcy judge who is overseeing FTX’s Chapter 11 bankruptcy.

WisdomTree filed an amended Form S-1 spot Bitcoin ETF prospectus with the U.S. SEC on Nov. 16. The update comes a few months after WisdomTree refiled its spot Bitcoin ETF application in June 2023, proposing a rule change to list and trade shares of the WisdomTree Bitcoin Trust. The amended prospectus mentions that the WisdomTree Bitcoin Trust ETF will trade under ticker symbol BTCW, with Coinbase Custody Trust serving as the custodian holding all of the trust’s Bitcoin on its behalf.