WazirX Faces Backlash Over $235M Loss and $10B Metaverse Strategy for Homebodies: Asia Express

This week’s summary highlights significant developments in the Asian crypto landscape.

Could the Metaverse Address Japan’s Hikikomori Dilemma?

According to research from Yuri Group, Japan stands to gain approximately $10 billion annually if just 10% of its 1.5 million hikikomori re-enter the workforce through metaverse platforms.

The term “hikikomori” refers to individuals who choose extreme social withdrawal, opting to stay at home and disengage from public life. This social issue not only impacts the workforce but also poses serious risks to the mental and physical well-being of those affected.

A state survey conducted in 2023 indicated that around 1.5 million individuals, or roughly 2% of the working-age population in Japan, are classified as hikikomori.

The Japanese government is investigating metaverse solutions to tackle several sociocultural challenges, including hikikomori. This was noted in a whitepaper on the metaverse released by the communication ministry, which can be found here.

However, Will Fee from Yuri Group expresses skepticism regarding the feasibility of such initiatives. He points out that, similar to various government discussions surrounding Web3, the plans lack detailed strategies for real-world implementation.

Indeed, some local government measures are underway. In 2022, Edogawa Ward in Tokyo discovered that one in 76 of its residents are hikikomori. The ward’s approach includes the establishment of the Hikikomori Metaverse Place, although Fee describes this effort as “rather underwhelming.”

This issue is not exclusive to Japan; in February, San Mateo County in California identified loneliness as a public health crisis. Virtual environments may provide a bridge to alleviate isolation for those who are shut in.

Controversial 55/45 Strategy from WazirX

On July 27, WazirX unveiled a “socialized loss” strategy following a significant $235 million hack that occurred on July 18, affecting 45% of user funds.

This strategy mandates that each user locks 45% of their assets while 55% remains accessible, effectively distributing the losses among all users.

Investors were presented with two choices under this plan:

• Option A: Users may access 55% of their funds but cannot withdraw them, gaining priority in future recoveries, contingent on successful recovery efforts.
• Option B: Users can access and withdraw their 55%, but they will be lower in priority for recovery compared to those who choose Option A.

WazirX aims to resume operations once users indicate their preferences, with an August 3 deadline set for responses.

The response from users has been largely negative, with concerns raised by executives from competing exchanges. For instance, Sumit Gupta, CEO of CoinDCX, remarked on social media about the handling of the situation: “Hate to be saying this, but the way @WazirXIndia is handling this entire situation isn’t community first and this IMO won’t go down well for them.”

In response, WazirX’s CEO, Nischal Shetty, defended the strategy, asserting that it was the quickest approach to reopening the platform amidst user concerns.

The hack that compromised WazirX represented a substantial portion of the $266 million total losses from hacks in July, according to industry analyses.

Philippines SEC’s Ongoing Efforts Against Binance

The Philippines Securities and Exchange Commission (SEC) is actively seeking to persuade Google and Apple to remove the Binance app from their local app stores.

SEC Commissioner McJill Bryant Fernandez shared in a report dated July 29 that discussions with Google have been ongoing since its initial request in April.

Fernandez stated, “I think they are just asking for some documentation, but I don’t think it is really a reservation for them to block.” No updates were provided regarding Apple’s response at that time.

As of August 1, confirimation revealed that the Binance app remains available on both platforms.

The SEC has warned the public to refrain from using Binance, noting that the exchange is not authorized to offer “securities” to the public since last November. In March, the National Telecommunications Commission directed service providers to block access to Binance’s website.

Surge in South Korean Crypto Trading Competition

Over 113,000 traders participated in Upbit’s first-ever crypto trading competition, with the leading performer achieving an impressive 1,345.39% profit, as reported on July 31.

The competition lasted for two weeks, beginning on July 2, and was split into two categories: the “whale league” for larger investors with a minimum starting capital of 10 million Korean won (approximately $7,318) and the “shrimp league” for smaller traders.

The top performers in the whale category managed to secure an 88.24% profit margin, earning 1 BTC, while the best shrimp trader received 0.15 BTC.

Participants in the shrimp league began with an average capital of 2,979,014 KRW, while whale investors had an average starting point of 78,590,355 KRW. Despite the differences, both leagues reported a nearly identical distribution of profits and losses, with approximately 63% recording gains and 37% facing losses by competition’s end.

This competition offered insights into the demographics of Korean won traders, who represented the most commonly traded fiat currency against cryptocurrencies in early 2024.

Participants in their 20s achieved the highest average profit percentage at 3.94%, despite their age group accounting for only 10.87% of total participants. Interestingly, only those over 60 had a lower participation rate with 5.22%.

Traders in their 50s followed closely with an average profit of 2.37%, ranking third among five age groups with 18.96% participation.

The largest segment of participants consisted of traders in their 40s, who made up 34.44% of the applicant pool and secured a third-highest profit of 1.84%.

Conversely, traders in their 80s registered negative performance, experiencing a decline of 5.73% during the competition.

About the Author: Yohan Yun

Yohan Yun is a multimedia journalist with extensive coverage of blockchain technologies since 2017. He has served as an editor at Forkast and reported on Asian technology news for Bloomberg BNA and Forbes. In his leisure time, he enjoys cooking and trying out new recipes.