Backlash as WazirX ‘socializes’ $235M loss, $10B metaverse plan for shut-ins: Asia Express

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

Can the metaverse solve Japan’s “hikikomori” problem?

Research and consulting firm Yuri Group estimates that Japan can inject about $10 billion a year into its economy if even 10% of the nation’s 1.5 million hikikomori re-engage in the workforce via the metaverse.

“Hikikomori” is a Japanese word for individuals who seek extreme isolation by staying home and withdrawing from social life. It’s a complex social problem that has reduced the nation’s workforce while damaging the mental and physical health of those living reclusive lives.

In 2023, a state survey estimated that 1.5 million people in Japan live as hikikomori. That’s roughly 2% of the working-age population. 

The Japanese government is exploring metaverse applications to address various social issues like hikikomori, as the communication ministry noted in its metaverse whitepaper.

But Will Fee, researcher at Yuri Group, tells Magazine there’s not a lot of meat on the bones of the proposal.“Like national-level government pronouncements on all things Web3 in Japan, there’s a lot of sizzle and not much steak, with little detail on how these plans might be put into practice on the ground,” he says.

There are some local government policies already in place. In mid-2022, Edogawa Ward in Tokyo found that one in 76 of its inhabitants are living as hikikomori. One of the solutions developed by the ward is the Hikikomori Metaverse Place, though Fee describes the project as “fairly underwhelming.”

Although the Japanese have coined a term for it, the phenomenon isn’t unique to the country. In February, San Mateo County in California declared loneliness a public health crisis. Virtual worlds could at least help ensure shut-ins get some human contact.

WazirX’s controversial 55/45 strategy

WazirX on July 27 announced a “socialized loss” strategy in response to the $235 million hack it suffered on July 18, equal to 45% of user funds.

The strategy proposes each customer locks up 45% of their funds while the remaining 55% becomes available, essentially distributing losses among them.

Investors were given two options based on this strategy.

Option A lets users access 55% of their assets but not withdraw them. In exchange, they are granted priority in the distribution of future recovery funds, if efforts are successful, that is.

Option B allows users access to 55% of their funds and withdraw them, but falls behind the priority list in recovery distribution compared to those that opt for the second option. 

WazirX states it plans to reopen its business after polling users on their preferred options. Customers have an August 3 deadline to respond.

The exchange drew public backlash from its users and even from executives of rival exchanges. 

“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,” said Sumit Gupta, CEO of CoinDCX on X.

Nischal Shetty, the CEO of WazirX, responded to criticism on X and stated that the socialized loss strategy was selected as the first option as it is the “fastest way to reopen the platform.”

The WazirX exploit accounted for the majority of the losses incurred by hacks in July, a month that totaled $266 million in losses.

Philippines SEC smells the end of the Binance era but Apple has been silent

The Philippines’ Securities and Exchange Commission (SEC) remains hopeful that Google and Apple will heed its call to remove crypto exchange Binance from their local app markets. 

SEC Commissioner McJill Bryant Fernandez told local news in a July 29 report that discussions with Google continued since the initial request in April. 

“I think they are just asking for some documentation but I don’t think it is really a reservation for them to block,” Fernandez reportedly said. The commissioner did not provide an update on Apple’s response.

Magazine confirmed on August 1 that the applications are still accessible on both markets.

The SEC warned the public against investing in or using Binance since November last year, stating that the exchange is not authorized to sell “securities” to the public.

In March, the Nationale Telecommunications Commission instructed internet services to block access to Binance’s website. 

Thousands of South Koreans rush into crypto trading competition, winner claims 1 Bitcoin

Over 113,000 investors took part in Upbit’s inaugural crypto trading competition, with the top performer bagging a 1,345.39% profit margin, the South Korean exchange announced on July 31.

The competition ran for two weeks from the start of July 2 and was divided into two categories. The “whale league” was for larger investors with at least 10 million Korean won (about $7,318) in starting capital. Those that didn’t qualify for the whale league competed in the “shrimp league.”

The top whales recorded 88.24% in profits to earn themselves a 1 BTC reward. The winner of the shrimp league, who had the largest profit margin in the competition, was awarded 0.15 BTC.

Shrimps had an average starting capital of 2,979,014 KRW, while whales had an average of 78,590,355 KRW. Both leagues had nearly identical profit and loss divisions at the end of the competition with around 63% on green and 37% in red.

The competition provided a sample size of the demographics of Korean won traders, which was the most traded fiat currency against crypto in the first quarter of 2024.

Investors in their 20s had the highest average profit percentage with 3.94%, though their age bracket only made up 10.87% of all participants. Only investors above the age of 60 had less participation than them with 5.22%.

Investors in their 50s had the second-highest average profit with 2.37%. They ranked third in participation among five age brackets with 18.96%.

Meanwhile, investors in their 40s made up the biggest piece of the participant’s pie with 34.44% and had the third-highest profit percentage with 1.84%.

Only investors above the age of 80 had a negative performance. They were down 5.73% throughout the competition.

Yohan Yun

Yohan Yun is a multimedia journalist covering blockchain since 2017. He has contributed to crypto media outlet Forkast as an editor and has covered Asian tech stories as an assistant reporter for Bloomberg BNA and Forbes. He spends his free time cooking, and experimenting with new recipes.