Our weekly roundup of news from East Asia curates the industry’s most important developments.

Hong Kong spot Bitcoin and Ether ETFs disappoint

Six Hong Kong spot Bitcoin and Ether ETFs from three issuers attracted $292 million on launch day, with Ether accounting for about 15% of the total. The haul disappointed many whose expectations were set sky-high due to the billions of dollars solicited by United States spot Bitcoin ETFs within one week of their debut in January.

“We tried to warn everyone to lower expectations re HK,” commented Bloomberg senior ETF analyst Eric Balchunas.

“That said, if you localize numbers, this was BIG: e.g., ChinaAMC Bitcoin ETF took in $123m on Day One, which already ranks it 6th of 82 ETFs launched in the past 3 yrs in HK and Top 20% overall.” 

Market participants were less impressed, however.At the time of publication, Bitcoin and Etherhavelost 10% of their value within the past month.Data from Arkham Intelligence indicate that for two ETFs, the Bosera HashKey Bitcoin ETF and Bosera HashKey Ether ETFs, the asset under management (AUM) figures almost entirely stem from pre-listing subscriptionswhiletrading volume post debut remains stunted.

The result shouldn’t have come as a surprise. 

Due to capital restrictions, the Hong Kong crypto ETFs are only accessible to the 7.5 million residents of the city and some overseas traders. Mainland China residents,who numberover 1.4 billion, are barred from accessing the ETFs without previous Hong Kong residency. In addition, Hong Kong residents could already access the U.S. spot Bitcoin ETFsprior tothe approval of the local ETFs.

That said, not everyone is bearish on the ETFs’ prospects. According to a recent survey by Hong Kong crypto exchange OSL, 77% of crypto investors in the East Asian city plan to invest in the local spot Bitcoin and Ether ETFs.

“This positive investor sentiment powerfully points to the growing acceptance and importance of digital assets in the region’s economy, and Hong Kong is once again marking its place as the digital asset hub,” wrote OSL’s executive director and head of regulatory affairs,GaryTiu.

Likewise,Balchunas saidin a follow-up post that the Hong Kong crypto ETFs’ performance was “way ahead of schedule,” with an AUM of $292 million on day one.The analystpreviouslyset an AUM target of $1 billion within two years for the Hong Kong ETFs, which is still well below the tens of billions of dollars managed by U.S. spot Bitcoin ETFs.

Airdrop farmer busted by Chinese police 

Despite mostly outlawing cryptocurrencies, Chinese police have arrested an individual, knownonlyas “Lan,” who allegedly impersonated a Starknet developer and fraudulently claimed 40,000 STRK, worth $120,000 at the time, from the Ethereum layer-2 solution’s official airdrop. Authorities reported: “Recently, the Cyber Security Brigade of the Xiangyuan County Public Security Bureau received a report from a victim, claiming that the 40,000 STRK coins that he had contributed to the STRK official development program hadbeen fraudulently claimedby others.”

“With the support of the Cyber Security Detachment of the Changzhi Municipal Public Security Bureau, the Xiangyuan Cyber Police based on relevant clues finally identified the coin theft suspect as Lan, a native of Meizhou, Guangdong Province.”

Lan, who appears to have publicly bragged about the airdrop theft on Twitter, stated that he first searched Starknet on Github, randomly “picked some co-contributors,” and finally “copied their name/efforts” in the official Starknet airdrop claim form to receive STRK. Chinese police further stated:

“He searched for relevant workload certificates submitted by others, impersonated other people’s identities and submitted more than 40 forms, and falsely claimed the funds. The victim’s 40,000 STRK coins were transferred to his OKX wallet, and then converted into 91,000 USDT coins (equivalent to more than 637,000 yuan) as his own.”

On Feb. 20, Starknet developers allocated approximately 700 million STRK tokens out of a total supply of 10 billion to reward Starknet developersand users, Ethereum solo and liquid stakers, as well asprojects and developers from outside the Web3 ecosystem.

Despite prior warnings, accounts from airdrop farmers and copycat accounts were allegedly included in the official airdrop. The project has since surpassed a fully diluted market capitalization of $13 billion. 

Binance shuts down Hong Kong-affiliated entity 

HKVAEX, a Hong Kong-based crypto exchange allegedly tied to Binance, has ceased operations as of May 1. 

“We have ceased the registration of new users and have discontinued all trading and deposit functions for existing users,” wrote HKVAEX staff. “Should you encounter any issues or require assistance, particularly after the platform is delisted, please do not hesitate to contact our support.”

Users who do not withdraw assets after the closure will be debited “a custodian fee of USDT 20 or the equivalent in other virtual assets” with weekly snapshots startingfromMay 1.

A few months earlier, HKVAEX withdrew its application for a crypto exchange license in Hong Kong. X account Wu Blockchain speculated that the withdrawal may have involved various reasons, including a request to change the audit company or provide more information. The firm did not state an official reason for the withdrawal. 

End of an era for Binance

Changpeng Zhao, the iconic co-founder and former CEO of crypto exchange Binance, has been sentenced to four months in prison after pleading guilty to one charge of money laundering. 

“I willdomy time, conclude this phase and focus on the next chapter of my life,” the former blockchain executive wrote.“I will remain a passive investor (and holder) in crypto.Our industry has entered a new phase. Compliance is super important,” he added.

Zhao, a Chinese-born Canadian national, founded Binance in 2017 with his spouse Yi He, a Chinese television personality, after a brief stint as the chief technology officer of crypto exchange Okcoin (now OKX).

Under his leadership, Binance quickly becomes the largest crypto exchange by trading volume, with a market share of over 50%. The exchange pioneered features that are now prominent in the industry, such as swaps, earn, API bots, farm pools, initial offerings, NFT marketplaces, exchange self-custody wallets and more.

However, the exchange’s rapid growth came at the cost of failing to maintain an adequate compliance program. Last November, the exchange announced a $4.3 billion settlement with the U.S. Department of Justice over money laundering charges. Zhao also stepped down as CEO as part of a plea deal. 

Binance’s new CEO, Richard Teng, has since stated that “gaps in compliance” from theearly days of Binanceare firmly in the past and that the crypto exchange is now “totally different.”