Dubai

Binance, crypto firms optimistic about UAE amid potential US regulatory shift

Ghaf Capital managing partner Feras Al Sadek argued that the UAE’s “regulation by education” sets it apart from other jurisdictions.

Binance and other cryptocurrency firms based in the United Arab Emirates are optimistic that the country will remain a hotspot for virtual assets despite a potential shift to the United States should the Western superpower become a more crypto-friendly jurisdiction.

The “regulation by enforcement” regime in the U.S. has pushed global crypto firms to move to locations such as the UAE, the United Kingdom, Switzerland, and Singapore. However, the idea that companies could potentially return to the U.S. should there be a change in direction was floated during a panel discussion on Dec. 11 at the Global Blockchain Congress event in Dubai.

Highlighting the UAE’s approach toward technology and innovation, Alex Chehade, Binance’s general manager for the Middle East and North Africa, said the local government has built infrastructures around numerous initiatives that encompass not just AI but also Web3, sustainability, and other verticals:

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Dubai regulator grants crypto license to Bahrain’s CoinMENA

The permit allows CoinMENA to provide retail and institutional customers in the United Arab Emirates with the ability to deposit and withdraw in UAE dirhams.

Dubai’s Virtual Assets Regulatory Authority (VARA) has awarded a virtual asset service provider (VASP) license to Bahrain-headquartered cryptocurrency exchange CoinMENA to operate and offer services in and from the Emirates.

The license acquired by CoinMENA FZE, the Dubai subsidiary of CoinMENA B.S.C., permits the platform to offer virtual asset broker-dealer services, the Dec. 12 announcement shared with Cointelegraph said. It comes a year after the platform obtained a provisional license from the Dubai regulator.

The exchange said it is already in partnership with digital banking platform Zand.

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Dubai awards conditional crypto license to climate-friendly Web3 firm

AYA is a climate-focused launchpad that supports innovations around sustainability, such as reforestation, nature credits, mangrove conservation and sustainable agriculture.

Dubai’s Virtual Assets Regulatory Authority (VARA) granted a conditional license to Enjinstarter’s AYA platform for offering crypto asset and investment services. 

On Dec. 11, the Dubai arm of Web3 launchpad and advisory firm Enjinstarter received a crypto license subject to fulfilling certain conditions before the commencement of services. After meeting all the requirements of VARA, the platform will be subject to regulatory verification and approval. The announcement read:

Enjinstarter has not yet responded to Cointelegraph’s request for comments about the outstanding regulatory prerequisites. However, in the official announcement, Prakash Somosundram, the co-founder and CEO of Enjinstarter and the AYA foundation, shared the company’s willingness to comply with the process laid out by VARA.

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Crypto investment platform Fasset granted operational license in Dubai

Fasset has been granted a Virtual Asset Service Provider (VASP) license from regulators in Dubai, allowing it to perform broker-dealer services legally in the emirate.

Digital asset investment platform Fasset was granted an operational license on Nov. 29, according to a listing on the Dubai Virtual Asset Regulatory Authority (VARA) website.

The Virtual Asset Service Provider (VASP) license granted to Fasset allows it to perform broker-dealer services legally in Dubai.

The company was initially based in London, though it now operates in Indonesia and Dubai.

Cointelegraph contacted Fasset for comment and additional information on the development but has not yet received a reply.

Related: Standard Chartered’s venture arm to set up crypto fund in UAE

VARA, the issuing regulator, is the sole authority for enforcing regulations on digital assets in Dubai. Earlier in November, the VARA shuffled around its leadership as it prepared to expand operations and “ramp up to full-scale market operations” in 2024.

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Dubai regulator demands Binance provide info on ownership, governance: Report

According to Bloomberg, the Dubai crypto regulator is also seeking similar details from other global crypto players.

The Virtual Assets Regulatory Authority (VARA), the entity that oversees crypto activities in Dubai, has asked Binance to provide more information about its business requirements in its efforts to tighten regulatory guardrails in the emirate, Bloomberg reported.

Citing three anonymous sources, Bloomberg reported on April 5 that the regulator had asked Binance to submit more information about the exchange’s ownership structure, governance and auditing processes. The people close to the matter said VARA has requested the same details from global crypto players looking to be licensed in Dubai.

VARA officials have also required Binance to provide similar information, on top of board procedures, at its global group level, with queries taking longer to address given the exchange’s size and complexity, two of the sources said.

The increased scrutiny over virtual assets service providers (VASPs) in Dubai adds to Binance’s woes as it faces more pressure from regulators in the United States.

Last week, the United States Commodity Futures Trading Commission filed a lawsuit against Binance and its CEO, Changpeng Zhao, alleging that the exchange engaged in improper compliance procedures and trading.

Zhao has since rejected the claims, calling them “an incomplete recitation of facts” and saying that Binance “does not trade for profit or ‘manipulate’ the market.”

Binance received a preparatory minimal viable product (MVP) license from VARA in September last year. The permit allows the platform to set up an office in the United Arab Emirates and provide digital asset exchange services to pre-qualified investors. However, the company can’t yet offer locally regulated digital asset services in the emirate.

The largest crypto exchange by trading volume would need to submit the necessary requirements to VARA to upgrade to an operational MVP license, which would allow it to offer its services to qualified individual and institutional investors, before securing a full market product permit.

Related: Groceries to luxury cars: The state of crypto adoption in Dubai

Currently, only digital asset custodian Hex Trust has secured an operational MVP license from the Dubai regulator.

According to VARA’s website, VASPs already providing their services must comply with their requirements before the end of June.

Magazine: Best and worst countries for crypto taxes — Plus crypto tax tips

Do Kwon faces fraud charges from US prosecutors hours after arrest

The Terraform Labs CEO is now facing fraud charges in South Korea, the Securities and Exchange Commission and federal prosecutors in New York.

Terraform Labs CEO Do Kwon has been charged with fraud by United States prosecutors in New York, just hours after he was reportedly arrested in Montenegro.

In a court filing signed by United States Attorney Damian Williams, the 31-year-old entrepreneur has been charged with eight separate counts, including commodities fraud, securities fraud, wire fraud, and conspiracy to defraud and engage in market manipulation.

Under the first charge, conspiracy to defraud, the U.S. prosecutors claim to have jurisdiction over Kwon because he made a series of false and misleading statements during a TV interview that was transmitted to — among other places — the Southern District of New York, about the extent to which the Terra blockchain had been adopted by users.

The remaining four charges are related to a series of purportedly misleading statements about the effectiveness of the TerraClassicUSD stablecoin (USTC) to keep its peg with the U.S. dollar, as well as Kwon’s alleged involvement in trading strategies that were designed to alter the market price of USTC.

The filing comes as Filip Adzic, the minister of interior of Montenegro, reported on March 23 that an individual suspected of being the former “cryptocurrency king” was detained at the Podgorica airport with “falsified documents.”

The suspect, believed to be Kwon, was detained in Podgorica Airport with fellow business partner Hon Chang Joon while trying to fly to Dubai, Adzic stated.

In a follow-up tweet, the Montenegro Interior Ministry reported that Kwon used forged travel documents from Costa Rica.

Criminal charges in Montenegro

According to a report by Montenegro-based newspaper Pobjeda on March 23, the Basic State Prosecution Office may soon press criminal charges against Kwon and Joon for using forged travel documents from Costa Rica, which they say was first discovered by Interpol.

The criminal offense is understood to fall under Article 412 paragraph 2 of the Criminal Code of Montenegro, which carries a maximum imprisonment sentence of three years.

A luggage search also found forged Belgium travel documents along with three laptops and five mobile phones, which were taken from them, Pobjeda reported.

Related: Terra co-founder Do Kwon says he’s not ‘on the run’

South Korean prosecutors issued an arrest warrant against Kwon on Sept. 14, who faces a series of fraud charges and breaches of capital markets law in his home state. Also, Interpol on Sept. 26 issued a red notice listing for his arrest, and the United States Securities Exchange Commission filed fraud charges of its own on Feb. 16.

The charges laid against him are in relation to his alleged role in the collapse of the $40 billion Terra Luna Classic (LUNC) token and TerraClassicUSD stablecoin (USTC) last May.

Since the collapse, Kwon has reportedly moved between Singapore, Dubai and Serbia.

The South Korean foreign ministry officially canceled Kwon’s passport on Oct. 20 after he failed to surrender his passport following an October 6 order.

Magazine: SEC sues Do Kwon, Paxos ready to litigate, SBF’s VPN: Hodler’s Digest, Feb. 12-18

Crypto.com gets MVP preparatory license from Dubai regulator

After completing the preparatory stage and obtaining an operational license in Dubai, Crypto.com plans to provide a comprehensive range of institutional services in compliance with regulatory requirements.

Crypto.com announced it has obtained a minimal viable product (MVP) preparatory license from Dubai’s Virtual Asset Regulatory Authority (VARA).

This preparatory phase operations license came after the exchange obtained provisional approval from the Dubai regulator in 2022. In the preparatory stage, the MVP license allows the exchange to fulfill the conditions to operate within set VARA rules. The rules outline that no company may carry out, or appear to, any virtual asset activity through promotions and offers in Dubai unless it is authorized and licensed by VARA.

Dubai’s VARA was established in March 2022 and is in charge of regulating, supervising and overseeing virtual assets and virtual asset activities in all zones across the Emirate of Dubai, including special development zones and free zones, but excluding the Dubai International Financial Centre.

In its preparatory stage, the MVP phase allows approved licensees to fulfill all pre-conditions required to undertake MVP market operations under the VARA regime. Once the license is operational, Crypto.com can offer spot and derivatives instruments of virtual assets. The offerings can include exchange services, brokerage, margin or leverage trading and over-the-counter offerings around settlements for institutional investors.

According to the announcement, Crypto.com was granted the MVP preparatory license following a thorough review of the exchange. The review included key personnel, governance procedures, Anti-Money Laundering and Countering the Financing of Terrorism capabilities, Know Your Customer policies and procedures, ultimate beneficial owner policies and procedures, compliance practices, and cross-border safety measures.

Related: Dubai to Abu Dhabi: How NFTs are used in the UAE

VARA CEO Henson Orser explained that VARA’s regulatory approach would be beneficial in forming a robust and resilient ecosystem that will provide a superior virtual asset market with secure international operations. He concluded that including companies such as Crypto.com would advance its mission of establishing a progressive, forward-thinking regulatory framework.

Recently, Crypto.com has been expanding its presence globally. The exchange is authorized and licensed in most major markets, including the United Kingdom, France, Italy and several others. It also received a payment institution license in Brazil.

Earlier, Binance gained an MVP license as the exchange changed its operational strategies and secured several regulatory licenses.

FBI, NY authorities probes collapse of TerraUSD stablecoin: Report

The controversial founder of Terraform Labs, Do Kwon, is at the center of the investigation, despite being believed to be hiding out in Serbia.

The United States Justice Department is reportedly investigating the collapse of the TerraClassicUSD (USTC) stablecoin, which contributed to a $40 billion wipeout in the Terra ecosystem last May.

Two agencies within the department — the Federal Bureau of Investigation and the U.S. Attorney’s Office for the Southern District of New York — have interrogated former staff at Terraform Labs in recent weeks, according to a March 13 The Wall Street Journal report.

The probe covers similar ground to a lawsuit filed against Terraform Labs and its founder Do Kwon by the U.S. Securities Exchange Commission on Feb. 16, according to people familiar with the matter.

Among topics that investigators have asked about was the relationship between Chai, a South Korean-based payment platform, and the Terra blockchain on which USTC operated.

The SEC alleged in its filing alleged that Kwon misled investors into believing that Chai transactions were processed on the Terra blockchain.

Do Kwon speaking at a conference about Terra before LUNC and USTC collapsed. Source: Terra

The SEC in its lawsuit also accused Kwon of misleading investors about the risks of the algorithmic-based stablecoin, which is designed to be pegged 1:1 to the U.S. dollar.

It is unclear what specific charges the Justice Department is potentially pursuing. The investigation does not necessarily mean that charges will be filed. 

Related: Do Kwon had the right idea, banks are risk to fiat-backed stablecoins — CZ

Since the collapse, Kwon reportedly left South Korea for Singapore, Dubai, and now Serbia, where he is now believed to be, according to South Korean officials. Two South Korean authorities were recently sent to Serbia to find Kwon but were unsuccessful in their search attempts.

Kwon, however, claims he is not “on the run” despite the South Korean prosecutors issuing Kwon an arrest warrant on Sept. 14 and a red notice filed by Interpol, the global law enforcement agency, on Sept. 26.

Kwon told podcaster Laura Shin in October that he hasn’t seen a copy of the South Korean arrest warrant, and has continued to deny fraud allegations on social media.

Meanwhile, New York prosecutors are understood to be investigating a series of chat-group investigations from former members at Jump Trading, Jane Street and Alameda Research, Bloomberg reported on March 13. Alameda filed for bankruptcy alongside FTX in November.

The investigation is reportedly looking into whether market manipulation tactics were involved in the TerraUSD stablecoin project.

Cointelegraph reached out to Terraform Labs but did not receive an immediate response.

Bybit halts USD bank transfers citing partner outages

Dubai-based Bybit is the latest crypto exchange to suspend U.S. dollar wire transfers, claiming partner disruptions.

Dubai-based crypto exchange Bybit has suspended United States dollar deposits via bank transfers in response to “service outages from a partner.” Funds can be withdrawn through wire transfers until March 10. 

In a blog post from March 4, the crypto firm said that “USD deposits via Wire Transfer (SWIFT) and Wire Transfer (For U.S. banks) are no longer available.“ Alternatively, users can continue to make USD deposits via the Advcash Wallet or with a credit card.

Withdrawals through the Advcash Wallet are scheduled to be available soon, noted the exchange. Bybit claims users’ funds are “safe and secure” but urges clients planning to withdraw USD to do so “as soon as possible to avoid potential disruptions.“

Bybit is one of the companies with exposure to the crypto lender Genesis Global Trading, which filed for Chapter 11 bankruptcy on Jan. 20.

According to Bybit CEO Ben Zhou, the exposure amounts to $150 million via its investment arm, Mirana Asset Management. According to Zhou, $120 million of the funds were collateralized and had already been liquidated. Moreover, he stressed that all client funds go into separate accounts, and Bybit’s earn products do not use Mirana.

The halt comes just a day after Silvergate Bank announced plans to discontinue its digital assets’ payment network, claiming the termination is a “risk-based decision.” The network was a major on- and off-ramp for USD in the U.S. crypto industry.

Regulatory pressure and market outflows after the dramatic collapse of cryptocurrency exchange FTX in November 2022 are driving U.S. banks to reduce their exposure to cryptocurrency assets.

In February, Binance announced it would temporarily suspend bank transfers of U.S. dollars. Previously, in January, the exchange said its SWIFT transfer partner, Signature Bank, would only process trades by users with U.S. dollar bank accounts over $100,000. Signature Bank previously announced it was drastically decreasing crypto deposits.

Regulation comes for crypto staking: Law Decoded, Feb. 6–13

Even the SEC Commissioner has publicly rebuked her agency over the shutdown of Kraken’s crypto staking program.

Last week, the United States Securities and Exchange Commission (SEC) reached an agreement with cryptocurrency exchange Kraken. The latter will stop offering crypto staking services to American customers and pay $30 million in disgorgement, prejudgment interest and civil penalties. 

While the sum of fines could hardly get an entity like Kraken off balance, the future of staking concerns the crypto market. The court agreement attracted the ire of not only the general crypto community but of investors, politicians and industry executives, with Cinneamhain Ventures partner Adam Cochran calling SEC Chair Gary Gensler “an agent of an anti-crypto agenda” rather than a regulator. The CEO of the Blockchain Association, Kristin Smith, urged Congress to take such important cases under its direct control.

The CEO and co-founder of cryptocurrency exchange Coinbase, Brian Armstrong, believes that banning retail crypto staking in the United States would be a “terrible” move by the country’s regulators. Armstrong also criticized the current lack of regulatory clarity in the U.S. and subsequent “regulation by enforcement” that he says is driving companies offshore, such as FTX.

Even the SEC Commissioner Hester Peirce has publicly rebuked her agency over the shutdown of Kraken’s crypto staking program. The commissioner blasted her agency, arguing that regulation by enforcement “is not an efficient or fair way of regulating” an emerging industry. Peirce implied the regulator was “lazy and paternalistic,” suggesting the SEC should have initiated a “public process to develop a workable registration process that provides valuable information to investors.”

South Korean regulator provides guidance on security tokens

South Korea established guidance that specifies which digital assets will be considered and regulated as securities in the country. The law considers securities as financial investments where investors are not required to make additional payments after their original investment. The Financial Services Commission (FSC) also provided examples of which digital assets will most likely be classified as securities. According to the FSC, this may include tokens that provide a stake in business operations, gives holders rights to dividends or residual assets, or provide profit to the investors.

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Dubai releases crypto regulations for virtual asset service providers

The Virtual Asset Regulatory Authority (VARA), the regulator in charge of overseeing cryptocurrency laws within Dubai, has issued new guidelines for virtual asset service providers (VASPs) operating within the emirate. All market participants, whether licensed by VARA or not, must adhere to marketing, advertising and promotions regulations. Violators will be fined between $5,500 (20,000 dirhams) and $55,000 (200,000 dirhams), and repeat offenders could see fines as high as $135,000 (500,000 dirhams). However, the rules only apply to market participants within Dubai, excluding those operating under the Dubai International Financial Centre.

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Interpol wants to police metaverse crimes

The International Criminal Police Organization, or Interpol, is investigating how it could police crimes in the metaverse. According to Interpol secretary general Jurgen Stock, as the number of metaverse users grows and the technology further develops, the list of possible crimes will only expand to potentially include crimes against children, data theft, money laundering, financial fraud, counterfeiting, ransomware, phishing, and sexual assault and harassment. The move to police the metaverse comes nearly four months after Interpol launched its own metaverse in October 2022 at the 90th Interpol General Assembly in New Delhi, India.

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