Author: Phil Stafford

Phil is a long-standing Australian journalist with specialised experience in business, finance, travel and popular culture.

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Australia Crypto Wallets Cryptocurrency Law Cryptocurrency Tax Gaming

Northern Territory Moves to Regulate Crypto Gambling

Cryptocurrency is about to join crocs and Kakadu as one of the three defining features of Australia’s Northern Territory, with plans afoot to include crypto betting as part of the Top End’s regulated gambling industry.

The Australian Northern Territory Racing Commission (NTRC) is seeking input and feedback from gambling licensees on how the regulatory landscape might change in order to get crypto betting off the ground in the NT.

With gambling in Australia regulated by states and territories rather than at federal level, the NTRC oversees all betting interests that are licensed in the NT, including global concerns such as Betfair, Entain Group, Draft Kings and Sportsbet.

Contents of Private Document Made Public

Julian Hoskins, principal of one of Australia’s largest gambling law and regulatory consultancies, Senet, has seen a private document circulated among licensees and chose to shed light on its contents:

Any licensee, for example a sports bookmaker licensed in the Northern Territory, who wants to accept cryptocurrency for billing or paying wages needs permission to do so. And there are certain conditions attached to that.

Julian Hoskins, Senet

“It is clear from the conceptual framework that they are looking at cryptocurrency gambling and not simply exchanging [crypto] for fiat,” Hoskins added, pointing out that gamblers will most likely have to place fiat and crypto bets separately on the one platform as the two financial instruments will not be interchangeable for gambling.

Given the popularity of crypto, I imagine it would be very popular as an alternative to fiat. I think it has the potential to be quite material.

Julian Hoskins, Senet

Other States Likely to Follow Suit

Hoskins says that if this model went according to plan in the Northern Territory, gambling regulators in other states would likely follow suit, while also noting that strict identification requirements have been proposed to maintain compliance with anti-money laundering (AML) regulations. As such, gamblers will most likely have to have their crypto wallet addresses verified, with any winnings sent back to the same wallet that made the initial deposit.

According to the document, the NTRC has recommended monthly crypto deposit limits of A$2,000 for the first 12 months, with a maximum bet of A$5,000 per month.

Mindil Beach Casino, Perth, NT. Source: mindilbeachcasinoresort.com.au

Hoskins, who is a gambling industry lawyer, also explained that local gambling companies will be required by law to maintain crypto wallets that contain enough funds to fully collateralise customers’ wagering amounts, as is common in fiat-based gambling.

As for the tax implications of using volatile crypto assets to gamble, Hoskins said he was not sure “how that would be handled”, which suggests the NTRC is still considering such issues.

This all comes just days after the recently elected federal government outlined its approach to crypto regulation, with Treasurer Jim Chalmers announcing a “token mapping” exercise that is expected to help “identify how crypto assets and related services should be regulated”.

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Celsius Crypto Exchange Crypto News Zipmex

Zipmex CEO Refuses to Quit Despite A$73 Million Loss

Zipmex co-founder and CEO Marcus Lim is standing firm on his intention to pilot the troubled exchange through a three-month stay of execution from creditors, which it won in the Singapore High Court last week.

Lim vows he will continue to steer the ship unless its new major shareholders tell him to resign, as he works to repay the $US50 million (A$72.8 million) lost through the collapse of crypto lenders Babel Finance and Celsius Network.

‘Key Shareholder’ Sought Lim’s Resignation

Earlier this month, a key shareholder of the exchange had sent Lim a letter requesting his resignation, citing a “loss of confidence between partners” and consequences from the Babel disclosure, according to a Bloomberg story attributed to a source claiming “specialist knowledge” of the situation.

Zipmex halted transfers and withdrawals in July when news broke of the missing millions. Since then the exchange has enabled partial withdrawals of its customers’ Bitcoin and Ether holdings, albeit in minuscule amounts.

Meanwhile, the three-month moratorium providing bankruptcy protection against creditors will hopefully enable the hamstrung exchange to complete a fresh capital raise of between $US50 million and $US80 million. Lim’s intention is to ultimately return funds to investors, all while he oversees a restructuring of the company.

New Shareholders May Seek New Leadership

“This plan includes potentially bringing in new majority shareholders who may want a greater say in management decisions,” Lim told The Australian Financial Review. “Should this happen, my co-founder Akalarp [Yimwilai] and I have made it clear that we will fully cooperate with them and their wishes in the event they may be looking for a management change.”

Zipmex, which employs around 250 people across Singapore, Thailand, Indonesia and Australia, joins two other Singapore-based firms attempting to trade their way out of financial difficulties brought on by the current market downturn. Vauld was also granted a three-month moratorium on its debts by the same court last week, while another crypto lender, Hodlnaut, announced widespread staff layoffs pending “police proceedings” after it too sought protection from creditors.

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Bitcoin ATMs Crypto News Hackers

Hackers Target Bitcoin ATMs Through Zero-Day Attacks

Adding to recent consumer consternation caused by illiquid crypto exchanges and lenders, hackers have exploited a zero-day vulnerability in General Bytes Bitcoin ATM servers to steal funds from customers.

General Bytes is the manufacturer of Bitcoin ATMs that, depending on the product, allow users to purchase or sell more than 40 different cryptocurrencies. However, in recent incidents that have seriously compromised their security, when customers have deposited or purchased cryptocurrency using these ATMs, the funds were instead siphoned off by hackers.

Remote Servers to Blame

The Bitcoin ATMs are controlled by a remote Crypto Application Server (CAS) that manages the ATM’s operation, which cryptocurrencies are supported, and executes the purchases and sales of cryptos on exchanges.

According to General Bytes’ security advice, the attacks were conducted using a zero-day vulnerability in its CAS:

The attacker was able to create an admin user remotely via the CAS administrative interface via a URL call on the page that is used for the default installation on the server and creating the first administration user. This vulnerability has been present in CAS software since version 20201208.

General Bytes security advice

General Bytes believes the hackers scanned the internet for exposed servers running on TCP ports 7777 or 443, including servers hosted at Digital Ocean and General Bytes’ own cloud service.

The hackers then exploited the bug to add a default admin user named ‘gb’ to the CAS, and modified the ‘buy’ and ‘sell’ crypto settings and ‘invalid payment address’ to recognise a crypto wallet under the hackers’ control.

Funds Diverted to Hackers’ Wallet

Once they had modified these settings, any cryptocurrencies received by CAS were forwarded to the hackers instead. “Two-way ATMs started to forward coins to the attackers’ wallet when customers sent coins to the ATM,” according to the security advice.

General Bytes, one of the largest manufacturers of cryptocurrency ATMs with almost 9,000 machines installed all over the world, is warning customers not to operate Bitcoin ATMs until they have applied two server patch releases, 20220531.38 and 20220725.22, on their servers. It has also provided a checklist of steps to perform on the devices before they are put back into service.

Most Exposed Servers Are in Canada

While it remains unclear how many servers were breached using this vulnerability and how much cryptocurrency was stolen, according to information provided by security firm BinaryEdge there are currently 18 General Bytes Crypto Application Servers still exposed to the internet, with the majority located in Canada.

Last year, El Salvador led the adoption of bitcoin in Central and South America by launching 1,000 Bitcoin ATMs across the country for buying and selling BTC. However, less than three months later a bitcoin ATM was burned and defaced with anti-BTC messages as protesters demonstrated resistance towards El Salvador’s pro-crypto President Nayib Bukele.

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Australia Crypto News NFTs Sports

AFL NFT Drop ‘Ripper Skipper’ Sells Out in Under 12 Hours

With the 2022 AFL finals season about to blast off on September 1, the Australian Football League’s first limited-edition drop of NFTs has galvanised fans of the indigenous code by selling out in less than 12 hours, raising over $130,000 in USDC:

The Ripper Skipper 2022 NFTs, so-named in reference to the captains (“skippers”) of the AFL’s 18 competing clubs, feature 78 significant highlights from the 2021 season, incorporating both video and audio.

Ripper Skipper NFT of Joel Selwood, captain of Geelong, the AFL’s No 1 team.

Another Drop on August 24

While the initial mint sold out in less than half a day, the wider public will gain access to another drop this Wednesday, August 24. The NFTs are launched to members of the public who have signed up to the allowlist, and will sell for A$49 in lucky dip packs of three cards with differing levels of rarity: common (90 percent), deluxe (8 percent), and ovation (2 percent).

Each pack features three “moments” involving selected club leaders in action. There’s also a 10 percent your pack will receive a special, extra-utility-carrying Genesis Ball NFT (pictured, below) as one of the three cards.

AFL Genesis Ball NFT. Source: afl.com.au

“Through our AFL Mint brand, we will launch exciting new moments across our men’s and women’s competitions, plus celebrate past greats and other product releases that will bring a unique fan experience we haven’t seen before,” said Kylie Rogers, executive general manager of customer and commercial at the AFL.

The AFL announced its NFT marketplace in April this year, revealing it had signed a five-year partnership with Be Media, a Perth-based subsidiary of Hong Kong NFT gaming giant Animoca Brands. At the time there was significant pushback from AFL fans who registered their disapproval at the AFL moving into the NFT space. So much for that …

AFL Mint Will Only Get Bigger in 2023

The marketplace will officially launch in 2023, allowing the selling and trading of moments between fans and collectors. AFL Mint has plans to expand on the concept and offer game-day events, tickets and the chance to meet players in the metaverse.

It appears rumours of a downturn in the NFT space, still negatively affecting the crypto world in general, have been somewhat exaggerated.

Categories
Crypto News Cryptocurrency Law Zipmex

Embattled Crypto Lender ‘Hodlnaut’ Applies for Creditor Protection

Hodlnaut has become the second Singapore-based crypto lender to seek a protection order from creditors after filing an application with the Singapore High Court to be placed under judicial management:

Hodlnaut Joins Vauld, Zipmex in Unholy Trinity

Following in the wake of Vauld, which was granted a three-month protection order earlier this month after it too suspended withdrawals without notice in July, Hodlnaut’s application will temporarily safeguard the lender from any legal claims.

Hodlnaut and Vauld join crypto exchange Zipmex, also based in Singapore, in securing temporary creditor protection. Earlier this week, Zipmex successfully won its own three-month moratorium until December 2 to enable it to formulate a funding and restructuring plan.

Hodlnaut hopes that being put under judicial management will allow it too to devise a recovery plan to avoid liquidating customer assets.

What Is ‘Judicial Management’?

Judicial management is a law in Singapore under which financially troubled firms are given the opportunity to rehabilitate themselves. The court appoints a judicial manager who temporarily takes over from the company’s managing director.

The appointment of a judicial manager can take up to a few months. Until the court confirms who that might be, the company may apply to appoint an interim judicial manager to act on a temporary basis in the same capacity. Hodlnaut has nominated Tam Chee Chong, director of the financial consultancy firm Kairos Corporate Advisory, as its interim judicial manager.

With almost four decades’ experience in a corporate finance advisory capacity, Chong has performed the role of judicial manager in a range of companies that have undergone restructuring:

With [Chong’s] experience and track record, we [Hodlnaut] believe he will be able to execute our recovery plan and restructure the business effectively.

Hodlnaut announcement
Categories
Crypto Exchange Crypto News Cryptocurrency Law Zipmex

Zipmex Granted Protection from Creditors for 3 Months

Embattled Asia-Pacific crypto exchange Zipmex has been granted protection from its creditors until December 2, with the Singapore High Court allowing it three months to come up with a funding and restructuring plan:

The moratorium amounts to half the period sought by Morgan Lewis Stamford, lawyers for Zipmex, who had applied for six months’ protection under Singapore’s insolvency law across the exchange’s outlets in Singapore, Thailand, Indonesia and Australia after they abruptly suspended withdrawals last month.

Court Orders Town Hall Meeting for Creditors

According to a statement this week from Zipmex, the court also directed that the exchange convene a town hall-style meeting with its creditor and customer base within one month from the date of the court’s moratorium decision:

[At this meeting], it will minimally be explained what the proceedings in Singapore mean for creditors and customers, the state of proposed investments, the likelihood for the completeness of investors’ proposals and how serious they are, and when customers will be able to access their Z Wallets.

Zipmex statement, August 16

Last week, Zipmex announced its Z Wallet customers would be able to “partially withdraw” some of their Bitcoin and Ether holdings, naming August 11 and 16 as respective dates for releasing “a specific amount” of ether and bitcoin. These amounts turned out to be 0.08 ETH and 0.0045 BTC (about US$150 and US$110, respectively).

Earlier this month, Zipmex said it was “exploring multiple avenues” to secure funding, adding that it was expediting due diligence after signing a memorandum of understanding (MOU) with two investors.

CEO Pressured to Step Down

Meanwhile, Zipmex shareholders and potential investors have reportedly urged CEO Marcus Lim to step down over management decisions they believe led to Zipmex’s liquidity crisis:

Zipmex is not the only Singapore-based firm to secure a moratorium against its creditors. Crypto lender Vauld was granted a three-month protection order by the same court earlier this month after it, too, froze withdrawals without notice in July.

Categories
Crypto News Crypto Wallets Metaverse NFTs Sports

Real Madrid and Barcelona FC Team Up for Metaverse Activities

Despite their innate differences and fierce rivalry on the pitch, Spanish football superclubs FC Barcelona and Real Madrid have filed a joint metaverse trademark application encompassing virtual reality gaming/clothing and crypto transaction management software:

Both Clubs to Offer Crypto Wallets

FC Barcelona and Real Madrid filed the application over a week ago but the news has only just been confirmed by trademarks lawyer Mike Kondoudis. The filing indicates that both clubs may be interested in offering their own cryptocurrency wallets.

The alliance has raised eyebrows in that each team represents totally different values. FC Barcelona symbolises the separatist Catalan region, while Real Madrid is linked to the royal family and represents traditional Spanish culture and nationalism.

The derby between the clubs is known as “El Clasico” and is one of football’s premier events. Both clubs have a global fanbase and are the world’s two most followed sports teams on social media.

Back on the Crypto Bandwagon

News of the joint venture has also created interest in light of the fact that FC Barcelona, along with English Premier League champions Manchester City, discarded its crypto sponsors last year in controversial circumstances.

In the case of FC Barcelona, the club announced it had cancelled a deal with NFT marketplace Ownix after the arrest of one of its consultants, Moshe Hogeg, owner of Israeli football team Beitar Jerusalem, for suspected crypto fraud.

Also in November 2021, the Catalan club announced it would be auctioning non-fungible tokens (NFTs) of memorable moments from the club’s 122 years in the game. It was whispered at the time that the auction would serve to offset a debt crisis afflicting the club.

Fan Tokens Part of Metaverse Strategy

Earlier this year, FT Barcelona confirmed music streaming giant Spotify as its jersey sponsor. It also issued its own fan token and has since been linked with fan engagement token company Socios.com in a US$100 million deal to reshape the strategies of the club in the Web3 and metaverse space.

In 2020, Real Madrid partnered with NFT collectible company Sorare and the following year announced it would issue Smart Tickets in the form of NFTs for its audience in partnership with LAVA.

Categories
Crypto News Social media

Email Service ‘MailChimp’ Suspends Crypto Accounts Without Notice

MailChimp has suspended the accounts of several crypto-related firms including intelligence platform Messari, crypto wallet provider Edge, NFT artist Ocarina, and Jesse Friedland, founder of NFT collection Cryptoon Goonz. Content creators and media outlets in the space have also been affected.

According to an email received by at least one of the above list: “[MailChimp] cannot allow businesses involved in the sale, transaction, trading, exchange, storage, marketing, or production of cryptocurrencies, virtual currencies and any digital assets.”

Twitter in Overdrive in Response to MailChimp Action

Messari founder Ryan Selkis was among the first to take to Twitter to register his disappointment at the action taken by MailChimp:

The Ethereum Foundation’s Sam Richards also revealed that its Ecosystem Support Program was also facing suspension:

Cory Klippsten of Swan Private, a Bitcoin investment advisory firm for corporations and high net worth individuals, joined the tweetstorm regarding MailChimp’s ban, calling on other marketing agencies in the industry to “step up” in light of this incident and others:

MailChimp Responds

In a limited response to the complaints, MailChimp said accounts were being disabled or “temporarily suspended” due to service violations. According to its website, the clause falls under the “Acceptable Use” policy, which outlines prohibited content.

In that same section, MailChimp states that “cryptocurrencies, virtual currencies, and any digital assets related to an Initial Coin Offering” are prohibited due to “higher-than-average abuse complaints”, adding that its site policy was updated in May of last year. Incidentally, it was in 2021 that the email marketing service provider was acquired by financial services giant Intuit.

Speaking on behalf of crypto-related content creators and media outlets, Analyse Asia founder Bernard Leong tweeted:

Pattern of Behaviour

This is not the first time MailChimp has gone after after crypto-related content. Such action can be traced back to 2018, the year Facebook also banned crypto-related advertising on its site due to breaches of regulatory guidelines.

Ironically, in April this year crypto hardware wallet company Trezor investigated “a potential data breach of an opt-in newsletter hosted on MailChimp”.

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Bitcoin Crypto News Ethereum Federal Reserve Markets

BTC and ETH Rally as US Inflation Shrinks to 8.5%

Crypto markets have responded favourably to a slower-than-expected US inflation print in July, with the official rate steady at 8.5 percent and both Bitcoin (2 percent) and Ethereum (9 percent) up within minutes of the report’s release:

With the worst of consumer price increases now behind the US economy, there was widespread relief on the part of crypto traders that the Federal Reserve might relax its aggressive approach to tightening monetary conditions.

CPI Unchanged, Below Projections

The consumer price index (CPI) was unchanged from the previous month, due in part to lower energy prices, according to a Bureau of Labor Statistics report. Food and energy prices aside, core CPI remained unchanged at 5.9 percent over the past 12 months, just under a projected 6.1 percent.

“The Fed will be cheered by the news, especially the fact that core inflation was also lower than expected,” said Richard Carter, head of fixed interest research at UK-based investment management firm Quilter Cheviot.

They will still need to hike rates at their next meeting in September, but this reduces the risk of another 75 basis-point move and, going forward, we might just see markets act a little calmer than they have to date.

Richard Carter, head of fixed interest research, Quilter Cheviot

Next Rate Hike Likely to be 50 Points, Not 75

More than 60 percent of traders are now betting the Fed will hike interest rates by 50 basis points in September, compared with half that number just one day ago, according to the CME FedWatch Tool. Traders saw a 75 basis-point hike as the likelier scenario after last week’s Bureau of Labor report showed the economy was still able to sustain more rate hikes.

All of which is a far cry from two months ago when crypto markets shed US$100 billion in the wake of the highest US CPI print in 40 years.

Categories
Crypto Exchange Crypto News Crypto Wallets Zipmex

Zipmex Announces Plans to Release a ‘Specific Amount’ of ETH and BTC

Embattled Asia Pacific exchange Zipmex has announced it will enable its Z Wallet customers to partially withdraw some of their Bitcoin and Ether holdings.

After details of its liquidity crisis emerged last month, Zipmex has named August 11 and 16 as respective dates for releasing “a specific amount” of ether and bitcoin.

Crypto Twitter Questions Zipmex Wording

Predictably, Crypto Twitter was quick to query the vagueness of the Zipmex announcement:

Restructure a Work in Progress

On July 20, Zipmex halted withdrawals from the platform, citing exposure to Babel Finance and Celsius. Following a restructuring plan, the exchange has been working with customers and regulators to ensure funds are returned. Last week, it announced withdrawals for altcoins including Solana (SOL), Cardano (ADA) and Ripple (XRP).

Zipmex operates in four countries – Singapore, Australia, Indonesia and Thailand – and offers both spot trading for cryptocurrencies and interest on deposits.