e-CNY chat wallet launched; Korean illegal crypto transactions surge

Transcript

If last week was all about China’s crypto crackdown, this week is going to be all about the country’s digital e-CNY rollout plans. Here’s a clue — most of China is connected on phones, linking to that would be a whole new ball game.

Welcome to The Daily Forkast, October 4th, 2021. I’m Angie Lau, Editor-in-Chief of Forkast.News covering all things blockchain.

The launch of an e-CNY wallet based within a chat application could see things really taking off in China. We’re going to talk about that and a whole lot more coming up.

Let’s get you up to speed from Asia to the world.

First up, two Chinese giants have teamed up to offer a digital yuan wallet accessible via a chat window on your mobile phone. China’s largest communications company China Mobile has partnered with the country’s biggest bank — ICBC — to launch the wallet.

Now, the ‘Message Over 5G’ wallet will allow users to transfer money, check balances and bills within the chat function, similar to the way the massively popular WeChat Pay service operates.

Forkast.News Carolyn Wright reports on what this could mean for the rollout of the country’s digital currency.

China has already wholeheartedly embraced mobile payments. According to data from Statista, Alipay has almost 700 million users, and Business of Apps suggests 900 million WeChat Pay users. That’s a significant number out of a population of 1.4 billion. And with WeChat Pay already allowing users to transfer money directly via its chat box, many in the country are already used to making such payments.

The new ‘Message Over 5G’ service will also allow users to transfer money directly in a chat box. That’s in addition to messaging friends with text and audio, video, location and contact cards just like WeChat. The service has already been under trial, but was only available on certain phones that had been tailored to support it.

This is its first large scale official promotion, with Chinese state owned media saying a full rollout will likely take place this month.

‘Message over 5G’ is being launched jointly by China’s three major telecoms operators China Mobile, China Telecom and China Unicom.

If the service proves as popular as WeChat Pay and Alipay, it could be huge for China’s e-CNY rollout plans.

For Forkast.News, I’m Carolyn Wright.

Meanwhile, in Korea, crypto bad actors are acting up. A new government report reveals that illegal foreign transactions made using virtual assets surged nearly 40x compared to last year alone.

More than US$600 million were traded unlawfully or illegally across the borders via crypto. And what’s more surprising here, perhaps only nine cases were actually responsible for all of that.

Forkast.News Danny Park has all the details,

According to a report from Korean lawmaker Song Jae-ho using data from the Korea Customs Service, the amount of illegal foreign transactions using virtual assets has already broken a record this year, hitting 812 billion Korean won, or around US$684 million — and that’s only from January to August.

The previous high was 784 billion won for the whole of 2018, while the amount fell to just 20 billion won last year. Lawmakers Song Jae-ho attributes the surge to the rise of speculative forces in and out of Korea, as prices of virtual assets soared domestically and as the virtual asset market grew larger.

So-called ‘hwanchigi’, or illegal foreign transactions trade different currencies with the Korean won without proper reporting to the banks to avoid remittance fees and high flows of money that would likely be unauthorized.

The unlawful transactions using virtual assets have brokers receive foreign currencies abroad where they purchase cryptocurrencies. They would then sell them in exchanges in Korea to earn profit since many virtual assets are overvalued in South Korea due to the so-called ‘kimchi premium’.

The bigger problem here is that these could also possibly fund tax evasion, illegal gambling or even drug smuggling.

One expert told Forkast.News it’s impossible to detect all illegal transactions using crypto.

“[Illegal foreign transactions] using cryptocurrencies are especially hard to expose. For example, the situation with the kimchi premium. They buy Bitcoin overseas and when they come back to Korea, they use their e-wallets which perfectly [hides their Bitcoin].”

Professor Oh says more research needs to be done to eradicate this financial crime as it has dangerous potential.

For Forkast.News. I’m Danny Park.

And finally today, we’re going to end on Compound here. Its technical woes for this decentralized finance protocol — well it continues.

A hack has resulted in just over 200,000 of its native COMP tokens worth around US$68 million at the time being transferred from its reservoir to its comptroller where they remain vulnerable to being drained by future transactions.

Now, yearn.finance developer Banteg tweeted about the hack on Sunday, saying four users had actually drained US$21.5 worth from the account, with the remaining US$46 million worth actually vulnerable here able to be claimed by a further five addresses.

Now, Compound’s woes began last week with an update called Proposal 062. A bug meant its comptroller contract — the part of the protocol responsible for allocating yield farming rewards — accidentally distributed 280,000 tokens to the wrong people, forcing founder Robert Leshner to ask users to please return them. To sweeten the deal, Leshner actually said that any users who return tokens would be able to keep 10% as white hat fee for their honesty, while simultaneously threatening to report anyone who did not to the US Internal Revenue Service or the IRS.

Leshner said 117,000 tokens had actually been returned by Monday morning Asia time — just another day in crypto.

And that’s The Daily Forkast from our vantage point right here in Asia. For more visit Forkast.News and don’t forget to subscribe, click like.

We really appreciate it. It really helps us do more great journalism for you in this emerging technology space.

I’m Editor-in-Chief Angie Lau. Until the next time.