Low-users, sex offenders are killing the Korean metaverse, 3AC sues Terra: Asia Express

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

The Korean Metaverse is Shutting Down Amid Scandals and Indifference

Korea’s tech-savvy population, high-speed internet, and deep-rooted gaming culture make it an ideal testbed for metaverse applications. Despite these advantages, some of Korea’s top metaverse platforms are now closing their doors.

The latest victim is 2nd Block, a metaverse built by Dunamu, which operates South Korea’s largest cryptocurrency exchange Upbit.

Dunamu announced that it would be shutting down its metaverse service on September 9 due to weak participation as the pandemic eased.

This follows a similar move by the Seoul metropolitan government, which announced last month that its $4.5 million metaverse project would close its virtual doors on October 16. Designed to provide residents and tourists with a digital space to interact and explore, the digital version of Seoul was built in less than two years.

Even the surviving metaverse is plagued by problems.

Zepeto, a metaverse developed by South Korean internet giant Naver, has found success by focusing on the global market. According to data analytics firm Sensor Tower, it had 20 million monthly visitors from overseas as of last year, while it had only 1.2 million domestic users.

The platform has also come under fire in South Korea after several parents reported that their children’s avatars were sexually harassed by other users.

In serious cases, criminals have reportedly coerced minors into sharing explicit images in exchange for game items.

In response to these incidents, South Korean lawmakers have proposed an amendment to current law that would impose prison sentences and fines on virtual sex offenders.

However, the final drafted bill failed to pass the National Assembly, leaving the issue unresolved.

Most complaints remain unresolved due to the difficulty in tracking predators across borders in digital spaces.

3AC Liquidator Sues Terra for $1.3 Billion Over Terra Collapse

Liquidators of the shuttered Singapore cryptocurrency hedge fund Three Arrows Capital (3AC) have filed a $1.3 billion lawsuit against Terraform Labs.

In court filings, 3AC’s liquidator Russell Crumpler and Teneo Holding’s Christopher Palmer alleged that Terraform Labs misled 3AC about the stability of its algorithmic stablecoin TerraUSD (UST) and its sister token LUNA, leading to hedge funds making significant investments in the assets.

The liquidators are seeking damages for the direct purchases of UST and LUNA, as well as damages for losses suffered on 3AC’s cryptocurrency investments due to the Terra collapse.

The 3AC turmoil began in May 2022, when Terra’s UST lost its peg to the US dollar, resulting in a $40 billion loss for the Terra ecosystem.

Despite the confidence of Terra co-founder Kwon Do-hyung (aka Do-kwon), the stablecoin’s failure triggered a chain reaction in the cryptocurrency markets, ultimately leading to 3AC filing for bankruptcy in July 2022.

The hedge fund, which once had $18 billion in assets, claimed that Terra’s collapse caused irreparable financial damage.

Terraform Labs filed for bankruptcy in January. In June, the company agreed to a $4.47 billion settlement to resolve an SEC civil lawsuit.

Meanwhile, Kwon, who was convicted of investor fraud by a U.S. jury in April, remains in Montenegro awaiting an extradition decision. Last week, his extradition to South Korea was postponed by Montenegro’s Supreme Court.

Malaysian police search after cryptocurrency kidnapping

Malaysian police are searching for four people suspected of being involved in the kidnapping of a Chinese man and a Malaysian woman. According to state news agency Bernama, the victims were kidnapped on July 11 and released four days later on July 15 after a ransom was paid in cryptocurrency.

The four wanted suspects are part of a group of 18 people involved in the crime. In early August, police killed four suspects in a shootout and 10 others were arrested. Among those involved was a man who worked as a driver for the male victim.

After the victims were released, $1.2 million worth of cryptocurrency was reportedly split between the suspects.

On August 15, six suspects who were arrested pleaded not guilty to charges under Malaysia’s kidnapping laws. If found guilty, they could face up to 40 years in prison and caning, which is corporal punishment including whipping.

During the investigation, police seized cash amounting to 1.65 million Malaysian ringgit (US$372,500) and other assets including a vehicle worth about US$700,000.

SBI’s Eternal Love for Ripple

SBI Holdings, the parent company of Japan’s largest online brokerage SBI Securities, has announced a strategic partnership with Ripple Labs, which aims to expand the use of non-fungible tokens (NFTs) on the XRP Ledger (XRPL).

Through this partnership, subsidiary SBI Digital Community will educate Bto3 community members on how to buy and sell digital assets on XRPL’s NFT marketplace, xrp.cafe.

The relationship between SBI, Ripple, and XRPL is not new.

SBI Remit, the remittance business unit of SBI Remit, has been using XRP for cross-border transactions since 2017 and was one of the first to adopt Ripple-based technology.

In April, SBI became the first Japanese company to use XRPL supply chain services.

In the United States, a years-long legal battle between Ripple and the Securities and Exchange Commission is coming to an end.

In an August 7 filing, Ripple was ordered by U.S. Judge Analisa Torres to pay a $125 million civil penalty and permanently bar the company from violating securities laws. The fine is far, far less than the $2 billion the SEC was seeking.

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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.