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Rain’s Abu Dhabi-based entity can now offer institutional clients and some retail clients in the UAE the ability to buy, sell and store virtual assets, Reuters reported.

UK data regulator The Information Commissioner’s Office is inquiring into the eyeball-scanning orb project Worldcoin — co-founded by OpenAI CEO Sam Altman — which launched its WLD token yesterday.

“We note the launch of Worldcoin in the UK and will be making inquiries,” a spokesperson for the ICO told The Block.

Worldcoin’s launch raises questions about user data protection. Organizations must perform a Data Protection Impact Assessment if they are involved in processing high-risk biometric data, according to the ICO. Should the risks identified be too high to mitigate, consultation with the ICO becomes mandatory. 

“Organizations must conduct a Data Protection Impact Assessment before starting any processing that is likely to result in high risk, such as processing special category biometric data. Where they identify high risks that they cannot mitigate, they must consult the ICO,” the regulator added.

Additionally, a clear lawful basis for personal data processing is required in the UK — with freely given consent being vital.

“Organizations also need to have a clear lawful basis to process personal data. Where they are relying on consent, this needs to be freely given and capable of being withdrawn without detriment,” the ICO said.

Worldcoin data privacy

Worldcoin said it complies with local laws, including Europe’s General Data Protection Regulation incorporated into UK law following Brexit. 

“The Worldcoin Foundation, and its contributor Tools for Humanity, adhere to the strictest privacy guidelines and requirements in the markets where Worldcoin is available and in select communities we are continuing to assess local laws and regulations to ensure compliance,” Worldcoin told The Block.  

“With regard to GDPR, Worldcoin is fully compliant with all laws and regulations governing biometric data collection and data transfer, including Europe’s General Data Protection Regulation. In the European Union, Tools for Humanity is under the supervision of the Bavarian State Office for Data Protection Supervision,” it added.

According to Worldcoin’s website FAQs, “Worldcoin never collects any biometric data from any user without that user’s explicit consent.” The page also states that no personal data needs to be shared for a user to download its World App, and any personal data shared with Worldcoin is encrypted in transit and at rest.

“Individuals who want to receive a World ID are not required to share their name, phone number, email address or home address,” the page states.

“Images collected by the orb are used to generate a unique iris code. By default, these images are immediately deleted once the iris code is created, unless the user opts into data custody,” the project says. “Opting into data custody will decrease the probability and frequency of the user’s need to reverify their World ID as the iris code algorithms change. The World ID sign-up process is only intended to verify an individual’s uniqueness,” it added.

“Worldcoin users may choose to share additional data, but this is never required. Importantly, the Worldcoin Foundation and its initial contributor Tools for Humanity do not, and never will, sell anyone’s personal data, including biometric data,” the page adds.

WLD token launch

Worldcoin launched its WLD token yesterday, which will be distributed to over two million people globally who have verified their identities via the iris-scanning orbs. The project aims to enable people to prove their identities online with credentials verified in person but has faced criticism over its “evil creation” and “exploitation.”

Ethereum co-founder Vitalik Buterin also outlined “four major risks” with Worldcoin following the token launch: privacy, accessibility, centralization and security.

Worldcoin’s main developer, Tools For Humanity, plans to deploy orbs in over 35 cities across 20 countries to accelerate user sign-ups and increase the number of orbs from 200 to around 1,500 by the end of the year.

Those verified by an orb will initially receive 25 WLD tokens and periodic grants going forward. Additionally, tokens can be reserved on the World App until users can visit an orb. However, Worldcoin has been careful to stress that the tokens will not be available in the U.S.

The token launch follows Worldcoin’s migration to the OP Mainnet, an Ethereum Layer 2 scaling solution, last week. It will distribute a total supply of 10 billion WLD tokens, with 80% reserved for users, operators and the ecosystem. The remaining 20% is set aside for the Worldcoin team and its backers, according to an investor deck.

The WLD token initially surged 88% on launch, following exchange listings from Binance, Huobi, Bybit and OKX. It reached $3.14 before falling back. WLD currently trades at $2.13, according to CoinGecko data.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

The recent hack involving crypto payments processor Alphapo’s hot wallets is now estimated to have resulted in a loss of $60 million, as per the latest findings.

This updated figure comes after on-chain analyst ZachXBT identified an additional $37 million in stolen assets on the Tron and Bitcoin networks, raising the initial estimate of $23 million.

As a crypto payments processor, Alphapo managed transactions for online gambling platforms such as HypeDrop, Bovada, and Ignition. Given that hot wallets are online and constantly connected to the internet, they face a higher risk of cyberattacks compared to their offline counterparts: cold wallets.

The hackers in this instance appear to have swapped the stolen funds on Ethereum for ETH and then bridged them to other blockchains: Avalanche, Tron and Bitcoin. Affected companies and platforms, like HypeDrop in this case, disabled withdrawals to prevent further damage. 

Potential Lazarus connection

The distinctive on-chain patterns associated with this breach, according to ZachXBT, align closely with operations previously linked to the Lazarus, a North Korean hacking group. Lazarus has been implicated in several high-profile hacks, including the Ronin bridge breach which resulted in a loss of over $600 million last year.

“This hack appears to likely have been done by Lazarus as they create a very distinct fingerprint on-chain,” ZachXBT highlighted.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Japan’s Prime Minister Fumio Kishida said web3 has the potential to transform the traditional internet framework and contribute to social change, speaking at the WebX web3 conference in Tokyo today via a video message. 

Kishida said the government was dedicated to creating an environment conducive to the promotion of web3 as part of his administration’s “new capitalism” economic policy designed to solve social issues by driving growth and innovation, CoinPost reported. “Web3 is part of the new form of capitalism,” he said.

Japan’s leader hoped the conference would serve as a platform where major Japanese companies announce significant projects aimed at creating valuable economic zones within the metaverse, he added.

Japan’s advantage in web3

Koichi Hagiuda, chair of the ruling Liberal Democratic Party’s (LDP) policy research council, opened the event, saying Japan had an advantage in emerging technologies like web3, having proactively regulated the cryptocurrency market.

Hagiuda also highlighted the importance of international cooperation, given web3’s global nature, hinting at potential collaborations with partners from the U.S., France and Singapore, among others.

Japan’s focus on web3 started in earnest when the LDP’s digital society promotion headquarters established its “web3 project team” in January 2022. The unit regards web3 as the new frontier of the digital economy and recommended its cultivation as an integral part of Kishida’s “new capitalism” policy, CoinPost said.

Binance CEO Changpeng Zhao also reconfirmed the launch of its new platform in Japan in August, Bloomberg reported, after acquiring the local exchange platform SEBC in November.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Australia needs to speed up putting in place more precise cryptocurrency regulation if it intends to keep up with a global race, Coinbase’s executive said today at an Australian Senate hearing.

Faryar Shirzad, chief policy officer of crypto exchange Coinbase, said that Australia must quickly introduce a crypto-related regulatory framework or legislation — as other competing jurisdictions have set clear time frames for regulation.

“In terms of time frames, you might find it interesting that MiCA will go live probably no later than early 2025. That’s at the outer end. The UK is accelerating its consultation to try to get in front of that timing. So when you’re looking at large global markets in crypto, it does provide a date at which others are trying to organize around,” Shirzad said via a video conference call at a public hearing of the Australian Senate Economics Legislation Committee.

The hearing took place as part of the procedure of the Digital Assets (Market Regulation) Bill 2023, a private senator’s bill introduced in March by Senator Andrew Bragg.

Slow progress

The Digital Assets Bill sponsored by Bragg aims to introduce licensing for crypto exchanges and clarify custody requirements. 

“The Digital Assets Bill will put Australia back into the race to regulate,” Bragg said in a statement in March. “Australia can be a digital asset hub while protecting digital asset consumers. But we must act now.”

Meanwhile, in February, the Treasury of Australia published a consultation paper on potential crypto regulation that applies some existing financial frameworks to regulate the country’s crypto sector. 

The Treasury said at the Tuesday Senate Committee hearing that it had collected feedback from 91 stakeholders for the consultation paper surrounding what it called “token mapping” — or “the process of identifying the key activities and functions of products in the crypto ecosystem and mapping them against existing regulatory frameworks.”

Nghi Luu, assistant secretary of the Treasury’s capital markets, payments and financial innovation branch, told the Committee that the Treasury plans to release the consultation results with refinements of a proposed regulatory framework in the coming weeks.

A global race

The testimonies at today’s hearing suggested Australia lags in crypto regulation compared to other jurisdictions, including the European Union, the UK and Singapore.

Hong Kong, which rolled out a licensing regime for crypto trading platforms in June, “did something quite surprising” last year, Shirzad of Coinbase said. 

“[The Hong Kong regulator] essentially out of nowhere decided to signal their interest in bringing and integrating crypto into their financial system,” he added. “And they were able, over the course of the ensuing nine months to issue a consultation paper, take public comment, put out a draft regulation, finalized it and have it go live. That’s a very, very fast time period and it’s an example of the speed at which markets move to kind of be competitive in the race.”

Shirzad said that while speed remains critical, the “balance of the rules set is obviously really important as well.”

“So making sure that it’s a framework that’s operable and that allows global companies to bring the strength of their global operations to serve the local market and things of that nature. So the details certainly matter, and I think there are significant elements of that in your legislation,” Shirzad added, responding to Bragg’s questions about the Digital Assets Bill.

“That’s part of the reason why we came on shore is because we perceive it as a market that is headed in a trajectory of regulatory clarity and certainty,” Shirzad said. Coinabse expanded its services to Australia in 2016.  “The sooner Australia acts, the sooner we can build and invest towards a framework that we understand will be stable and resilient for us to grow into.”

Jonathon Miller, managing director of Australia for Kraken, also testified that the regulatory uncertainty makes it hard to make decisions, and “there’re lots of layers to that.”

“It’s well known that there are businesses in Australia that are deciding that other regimes are more certain for them,” Miller said. “It’s well-known that banking relationships for crypto businesses are hard to manage because there’s uncertainty in the market.”

“We’re very committed to Australia, to this market. We have been for many years,” Miller added. “But it is tricky to make decisions when you don’t have a clear view.”

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

A 25 basis point rate hike on Wednesday is a foregone conclusion. The question is whether the Fed will continue to raise rates in subsequent months.

The firm has claimed that they comply with “very, very local and very specific rules and regulations in each of the markets where there’s an Orb.”

Accountancy group BDO found nothing amiss in FTX’s $376 million swoop to acquire Digital Assets AG (DAAG), the Swiss startup that was later rebranded FTX Europe.  

In excerpts of a lengthy report reviewed by The Block, published in April 2022 as part of the acquisition process, BDO wrote that the deal “reasonably represents fair value.” That contrasts sharply with the view FTX Trading took in a recent complaint.

FTX Trading, under the management of bankruptcy veteran John Ray, has filed a flurry of lawsuits in recent weeks as part of a campaign to claw back funds it claims were distributed with reckless abandon while the failed exchange business was still under the control of alleged fraudster Sam Bankman-Fried. 

In one recent example, FTX Trading sued insiders at the collapsed crypto exchange’s European unit — claiming former CEO Bankman-Fried had significantly overpaid for it, in part because of his allegedly close ties with DAAG executives Patrick Gruhn, Robin Matzke and Brandon Williams, who are the subjects of the complaint. 

The bankrupt crypto group’s new management framed the deal as one of many “dubious investments” that Bankman-Fried and lieutenants Caroline Ellison, Gary Wang and Nishad Singh financed using misappropriated funds. 

Conversely, BDO’s report suggests it was “consummated in an arm’s length basis by knowledgeable, unrelated parties.” 

Little more than a business plan

A spokesperson for FTX Trading said of BDO’s assessment, “The April 2022 ‘valuation report’ simply assumes that the purchase price reflected fair value because it was ‘arms-length,’ and one cannot, of course, presume the fairness of a fraudulent transaction from the fact that it took place.”

They also reiterated some of the key points of the complaint, adding that FTX Trading has filed suit to recover more than $320 million “wrongly paid to the defendants by FTX at the direction of Sam Bankman-Fried to acquire a company, the purported value of which came from a license obtained after the transaction for just over $2 million.” That figure refers to the €2 million that Matzke and Gruhn paid to acquire K-DNA Financial Services Ltd., a licensed Cyprus investment firm.

Besides that license, FTX Trading alleges that Bankman-Fried and his colleagues paid more than $376 million for little more than “a ‘business plan.’”

BDO didn’t respond to multiple requests for comment about the assessment. DAAG declined to comment. 

Auditors flee crypto

The lack of due diligence performed by investors and acquirers in the crypto sector has come under close scrutiny following the collapse of FTX and a host of other heavily hyped startups last year. 

Many deep-pocketed investors, including the likes of Sequoia Capital and Temasek, were forced to write off hundreds of millions of dollars that they had invested in FTX. Andrew Wingfield, a partner at Proskauer Rose, the law firm, said the downfall of Bankman-Fried’s empire “serves as a powerful lesson for investors in the tech sector, underscoring the significance of conducting thorough due diligence before making financial commitments.” 

Yet fewer and fewer auditors appear willing to operate in the space.

In December last year, shortly after the collapse of Bankman-Fried’s empire, The Wall Street Journal reported that BDO was reconsidering its work for crypto companies. The company had signed off on reserves reports for Tether, the stablecoin issuer, not long before. 

BDO later walked away from a potential gig auditing crypto venture fund Shima Capital in March 2023 after a policy change that meant it fell outside the accountancy firm’s risk parameters.

French auditing firm Mazars, which had previously helped exchange giant Binance produce controversial proof-of-reserves reports, paused all work with crypto clients in December last year. 

Accounting firm Armanino, which audited FTX US, closed its crypto audit practice in December 2022. Members of its team spun out and started their own crypto auditing firm called The Network Firm, which has worked with TrueUSD (TUSD) and others.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Crypto firm Rain was granted permission to operate as a virtual asset brokerage and custody service provider by Abu Dhabi’s financial regulator.

The brokerage will offer institutional and retail clients in the UAE the ability to buy, sell and store virtual assets. In addition, users of the platform will be able to on- and off-ramp to the UAE dirham.

The platform received financial services permission from Abu Dhabi’s Financial Services Regulatory Authority on Tuesday, 

“With this license, we can now offer our customers an even greater level of security and trust, as we continue to drive innovation and growth in the virtual assets space. Rain now offers the only regulated on-ramp and off-ramp of AED into virtual assets in the UAE,” Rain CEO Joseph Dallago said.

Abu Dhabi digital asset ecosystem

The cryptocurrency platform received an in-principle approval for an FSP from the Abu Dhabi Global Market’s in 2022. Rain markets itself as “the simplest way to trade crypto across the Middle East.”

“With the inclusion of companies like Rain, we are continuously trying to add value to Abu Dhabi’s digital asset ecosystem,” chief of market development at ADGM Arvind Ramamurthy added. “This is while also supporting the diversification of our flourishing economy.”

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Crypto traders are buying up DOGE in hopes of the token playing a larger role on Twitter, which rebranded as “everything app” X on Monday.