China NFT Weekly: Ripple Effects of Crypto Market Crash

Digestible news about the latest developments across the fields Web3, NFT, blockchain and metaverse in China and beyond, collected for you every week by Pandaily.

This week: Crypto investor Sequoia Capital China raises $ 9 billion, Chinese beauty app Meitu registers up to $ 52.3 million in net losses during crypto market crash, Animoca Brands leads $ 32 million in funding round for Web 3.0 gaming company Planetarium Labs and more .

Crypto investor Sequoia Capital China is raising $ 9 billion

Sequoia Capital China, a branch of a crypto-friendly venture capital firm, is close to raising nearly $ 9 billion to launch domestic startups, despite the effects of Beijing’s zero-Covid policy and a technological breakdown. The Cointelegraph and the Financial Times first reported the story.

• Sequoia China has reportedly exceeded the original target of $ 8 billion, and the final amount is intended to be the largest pool of capital ever raised by a VC company focused on Chinese tech startups.
• Sequoia China plans to end the round within a week, with 50% of the funds oversubscribed.
• Sequoia China is investing in many crypto-technology companies, including the troubled crypto-lender Babel Finance, which stopped withdrawing in mid-June during the recent crypto-market crash.
• While global institutional investors, including sovereign wealth funds, US college grants and pension funds, have largely withdrawn from Chinese funds over the past year due to regulatory uncertainty, the world’s leading investment institutions such as Sequoia China and Hillhouse continue to raise money.
• In addition to regulatory concerns, global investors are also concerned that investments in Chinese technology startups could be hit by potential fallout from close ties between Moscow and Beijing.
• China-focused funds have struggled to raise money from global investors this year, raising just $ 4.8 billion in the first six months of 2022, according to the Financial Times, citing data from financial data firm Preqin. (Cointelegraph, Financial Times)

READ MORE: All our stories about Sequoia China Capital!

Chinese beauty app Meitu registers up to $ 52.3 million in net losses in the middle of the crypto market

Meitu, best known as the developer of the popular Chinese selfie apps Meitu App and Beuaty Cam, warns investors that losses could increase by up to 154% during 2H22 due to the holdings in crypto, which have had a meltdown in the last two months . Fortune and SCMP first reported this story.

• The Hong Kong-listed company stated in a filing last week that net losses for the first half of 2022 could range between $ 41 million and $ 52.3 million, while net losses were $ 20.57 million in the same period last year.
• Meitu attributed the growing losses to the crash value of cryptocurrencies, which include 940 Bitcoin and 31,000 Ether. The company acquired the assets for $ 49.5 million and $ 50.5 million, respectively, between March and April 2021.
• The purchase came weeks before Chinese regulators banned financial institutions and payment companies from trading in crypto in May 2021. The Chinese government later expanded the scope of its action to include all transactions involving cryptocurrencies.
• Meitu has not bought or sold any crypto since China’s last cryptocurrency ban, the company said in its submission.
• Meitu is one of the world’s best owners of cryptocurrencies, ranked 12th among listed companies worldwide, according to Fortune, citing data from CoinGeck.
• The recent crypto market crash is driven by sharp interest rate hikes in the US, which led to recession fears and cryptocurrency sales.
• Meitu fell 10.6% to 93 HK cents in Monday trading, but the company claimed that the losses will have “no significant impact” on cash flow if the crypto market recovers. (Fortune, SCMP)

Animoca Brands leads $ 32M funding round for Web3 Gaming Company Planetarium Labs

Planetarium Labs, a builder of community-driven blockchain games, has raised $ 32 million in a Series A funding round led by Animoca Brands. CoinDesk and VentureBeat first reported the story.

• Krust Universe, WeMade and Samsung Next also participated in the financing round. Krust Universe is the investment arm of the South Korean technology conglomerate Kakao, and WeMade is the publisher of games to earn the game Mir4.
• Planetarium Labs will use the proceeds to expand its network of gaming and player management tools, co-founder and CEO Kijun Seo wrote to CoinDesk in an email.
• Planetarium’s gaming ecosystem is built on Libplanet, a software development kit for creating decentralized online games.
• Libplanet technology is used in the open source role-playing game Nine Chronicles, which has more than 300,000 users and supporters including Animoca Brands, Binance Labs and Ubisoft.
• “We strongly believe that the future is massive decentralized worlds in an open metaverse, which is why we are pleased to support Planetarium Labs’ vision of community-centric blockchain games that give players creative freedom and full digital rights,” said Animoca Brands. CEO Yat Siu said in a statement.
• Animoca Brands is a Hong Kong-based gaming software developer and venture capital firm. Portfolio investment amounted to more than $ 1.5 billion spread over 340 investments at the end of April (CoinDesk, VentureBeat)

READ MORE: Read all our stories at Animoca Brands!

Wage payments in Tether have been ruled illegal in China

Beijing’s Chaoyang District People’s Court has ruled that stablecoins such as the USDT cannot be used for wage payments, according to the Cointelegraph, citing a report by the local Beijing Daily News Agency.

• The news came several months after China’s general ban on cryptocurrencies in September, which blocked all transactions involving cryptocurrencies.
• The Chinese court ruled that cryptocurrencies such as the USDT could not circulate in the market as currency, and demanded that all employers pay their workers using the country’s official currency (RMB).
• The ruling came as part of a lawsuit in which an employee of a blockchain company sued his employer for having paid wages and bonuses in USDT instead of RMB.
• Referring to China’s general cryptocurrency ban, the court said that digital currencies such as USDT do not have the same status as legal tender. As such, the court ordered the defendants to pay the plaintiff more than 270,000 RMB ($ 40,000) in salaries and bonuses.
• The Tether USDT is an important stable currency linked to the US dollar in a 1: 1 ratio. It is backed by dollars held in US government reserves, cash deposits and other assets. (Cointelegraph)

Crypto Exchange CoinFlex plans to recover $ 84 million

CoinFlex, a small cryptocurrency exchange focused on derivatives trading, said it had taken legal action to recover $ 84 million in losses from a single customer. Bloomberg and Mint first reported the story.

• The company said it is also considering a joint venture with another crypto company to recover the losses.
• CoinFlex stopped withdrawing from the platform last month after a longtime investor, Roger Ver, failed to repay $ 47 million from a margin call.
  • A margin call is the security that a holder of a financial instrument (eg crypto) must deposit with a counterparty (eg a brokerage house) to cover some or all of the risks it poses to the counterparty.
• “The person first asked us to liquidate his account, but then went on to tell us for a long time afterwards that he wanted to send significant funds to the stock exchange to take physical delivery of the futures positions,” CoinFlex co-founders Sudhu Arumugam and Mark wrote Lamb in the post Saturday. , without mentioning Ver’s name. “It is clear to us now that he was wasting time and hoping for a bounce in the market that never materialized.”
• The news came amid a cryptocurrency market crash that wiped out nearly $ 2 trillion in the total value of cryptocurrencies.
• CoinFlex revealed that there is a plan to obtain enough external financing in the USDC, a stable currency linked to the US dollar, to alleviate the liquidity squeeze and resume withdrawals. (Bloomberg, Mint)

Hong Kong Securities Regulator Ashley Alder to head the UK Financial Conduct Authority

Ashly Alder, CEO of the Hong Kong Securities and Futures Commission (SFC), will be the next head of the UK Financial Conduct Authority (FCA), starting in January 2023. CoinDesk and Cointelegraph first reported the story.

• Age will succeed interim FCA leader Richard Lloyd, who took office after Charles Randell’s resignation in May.
• The FCA became the UK’s authority to combat money laundering and counter terrorism financing in 2020, bringing crypto companies within their area of ​​responsibility.
• Alder, a former lawyer, has headed the Hong Kong Securities and Exchange Commission since 2011. He oversaw the implementation of the territory’s digital asset rules and also headed the International Organization of Securities Commissions, or IOSCO.
• Hong Kong is among the world’s freest economies for traditional finance. However, the same rules do not apply to crypto.
• Industry stakeholders are concerned about the region’s long-term potential given Beijing’s growing influence.
• In addition, the region’s strict rules for Virtual Asset Service Providers (VASP) prevented retail investors from investing in the area.
• Alder said in his acceptance of the new position that he hopes the Financial Watchdog will help “chart the UK’s future after Brexit as a global financial center that continues to support innovation and competition through its own world-leading regulatory standards.” (CoinDesk, Cointelegraph)

That was all for this week’s newsletter – thank you for reading! As always, we welcome feedback on how we can make this newsletter better. Write to us at [email protected]. See you again next week!