Backlash over WazirX ‘socialising’ $235m losses, shutting down $10bn metaverse plan: Asia Express

We round up the weekly news from across Asia, highlighting the most important industry trends.

Can the Metaverse Solve Japan’s ‘Hikikomori’ Problem?

Research and consulting firm Yuri Group estimates that if just 10% of Japan’s 1.5 million hikikomori returned to work via the metaverse, Japan could pump about $10 billion into its economy annually.

“Hikikomori” is a Japanese word that refers to an individual who stays at home, withdraws from social life, and seeks extreme isolation. It is a complex social problem that reduces the country’s labor force and harms the mental and physical health of those who live a reclusive life.

According to a 2023 national survey, there are an estimated 1.5 million hikikomori living in Japan, or about 2% of the working-age population.

The Japanese government is exploring metaverse applications to address various social issues, including hikikomori, as the Ministry of Communications mentioned in its metaverse white paper.

But Will Fee, a researcher at the Glass Group, told the magazine that the proposal’s skeleton is thin. “Like all national government proclamations about Web3 in Japan, there’s a lot of talk, little stakes, and very little detail on how the plan would work out on the ground,” he said.

Some local government policies are already in place. In mid-2022, Tokyo’s Edogawa Ward discovered that one in 76 residents was living as a hikikomori. One solution the ward has developed is the Hikikomori Metaverse Place, but Fee describes the project as “quite underwhelming.”

The Japanese coined the term, but the phenomenon isn’t unique to Japan. In February, San Mateo County, California, declared loneliness a public health crisis. Virtual worlds can at least help those stuck inside find human contact.

WazirX’s Controversial 55/45 Strategy

WazirX On July 27, they announced a “socialized loss” strategy in response to the $235 million hack that occurred on July 18. 45% of user funds.

This strategy suggests that each client locks up 45% of their funds and makes the remaining 55% available to spread losses.

Investors were presented with two options under this strategy:

Option A gives users access to 55% of their assets, but they cannot withdraw them. In return, if the effort is successful, they are given priority in future distributions of the recovery funds.

Choosing Option B will give users access to and withdraw 55% of their funds, but will put them behind in the redemption distribution priority list compared to those who choose the second option.

WazirX has announced that it will resume operations after conducting a poll on users’ preferred options. Customers have until August 3 to respond.

The exchange has faced public backlash from users as well as executives at competing exchanges.

“I hate to say it, but the way @WazirXIndia is handling this whole situation is not putting the community first and I don’t think that’s good news for them,” said Sumit Gupta, CEO of CoinDCX on X.

WazirX CEO Nishal Shetty responded to the criticism of X, saying that the socialized loss strategy was chosen as the first option because it was the “fastest way to restart the platform.”

The WazirX attack accounted for the majority of the July hacking losses, totaling $266 million.

Philippine SEC heralds the end of Binance era But Apple was silent

The Philippine Securities and Exchange Commission is hoping that Google and Apple will comply with its demand to exclude cryptocurrency exchange Binance from its app market.

SEC Commissioner McGill Bryant Fernandez told local news outlets on July 29 that discussions with Google have continued since the initial request was made in April.

“I think they’re just asking for the documents, but I don’t think the blocking is actually a reservation,” Fernandez said. The commissioner did not provide an update on Apple’s response.

The magazine confirmed on August 1 that the app was still accessible in both markets.

In November, the SEC warned the public not to invest in or use Binance, stating that the exchange was not authorized to sell “securities” to the public.

In March, the State Communications Commission instructed internet services to block access to the Binance website.

Thousands of South Koreans entered a cryptocurrency trading competition, with the winner claiming 1 Bitcoin.

On July 31, the first cryptocurrency trading competition held by the South Korean exchange Upbit was announced to have attracted over 113,000 investors, with the top investor earning a profit margin of 1,345.39%.

The competition ran for two weeks from July 2nd and was divided into two categories. The “Whale League” was for large investors with a minimum initial capital of 10 million won (about $7,318). Those who did not make it to the Whale League competed in the “Shrimp League.”

The top whales earned 1 BTC for a profit of 88.24%. The shrimp league winner with the largest profit margin in the competition was awarded 0.15 BTC.

The shrimp had an average starting capital of 2,979,014 won, while the whales had an average of 78,590,355 won. Both leagues had almost identical profit and loss sections at the end of the competition, with about 63% being green and 37% being in the red.

The competition provided a sample size of the demographics of traders of the Korean Won, the most traded fiat currency against cryptocurrencies in Q1 2024.

Investors in their 20s had the highest average return at 3.94%, but their age group only accounted for 10.87% of all participants. Only investors over 60 had a lower participation rate at 5.22%.

Investors in their 50s had the second highest average return, at 2.37%. They ranked third in participation among the five age groups, at 18.96%.

Meanwhile, investors in their 40s accounted for the largest proportion of participants, accounting for 34.44%, and their rate of return was also the third highest at 1.84%.

Only investors over 80 years old had a negative performance: they lost 5.73% throughout the competition.

Yoon Yohan

Yohan Yoon is a multimedia journalist covering blockchain since 2017. He has contributed as an editor to Forkast, a cryptocurrency media outlet, and has covered Asian technology stories as an assistant reporter for Bloomberg BNA and Forbes. In his free time, he enjoys cooking and experimenting with new recipes.