Fintech Arm of Chinese Insurance Giant Shoots for $500M IPO in US

OneConnect, the financial technology subsidiary of Chinese insurance giant Ping An, has updated its filing for an initial public offering (IPO) with the United States Securities and Exchange Commission (SEC).

According to an F-1 filing dated Dec. 2, the firm is looking to sell $500 million worth of shares in its IPO. The recent filing states:

“We expect that we will receive net proceeds of approximately US$438.2 million from this offering, or approximately US$504.6 million if the underwriters exercise their over-allotment option in full.”

Reports circulating in November claimed that OneConnect initially sought approval for a $100 million IPO.

In the filing, the company explains that its platform provides “cloud-native technology solutions” and its “solutions provide technology applications and technology-enabled business services to financial institutions.” 

Overall, OneConnect claims that its services allow customers to increase revenue, manage risks, improve efficiency, enhance service quality and reduce costs.

The firm also claims that at the end of September it had over 3,700 customers, including “all of China’s major banks, 99% of its city commercial banks, and 46% of its insurance companies, collectively reaching hundreds of millions of end-customers.” Technologies employed by the company include artificial intelligence, big data and blockchain.

The current target is much lower than the $1 billion OneConnect sought in a Hong Kong IPO filing earlier this year. 

Bold claims about blockchain performance

The company claims that its blockchain technology can manage up to 50,000 transactions per second with a latency under 0.5 seconds, while also implementing privacy through zero-knowledge proofs. OneConnect’s technology has been used to develop the major blockchain-based trade finance platform eTradeConnect in partnership with the Hong Kong Monetary Authority. 

The documents also claim that OneConnect’s parent firm, Ping An Group, is China’s second-largest financial institution and the sixth-largest in the world by market capitalization. According to company data website Crunchbase, OneConnect has received $650 million in funding so far in a single round led by Japanese telecommunications giant SoftBank.

As the blockchain and cryptocurrency industries are becoming more mature, IPO announcements have become ever more frequent. Last month, Bitcoin mining giant Canaan Creative also held an IPO, which raised $90 million — over 75% less than expected.

China’s Hainan Free Trade Zone Pledges $140M in New Blockchain Support

Blockchain will continue to see major investment from China’s Hainan Free Trade Zone (FTZ) with new funds fostering local businesses.

As local English-language news outlet Xinhua Net reported on Dec. 5, Hainan’s dedicated economic pilot zone has pledged to boost the role blockchain tech plays in the local economy. 

Free Trade Zone’s “support” for blockchain

The new measures, which the pilot zone announced at a press conference this week, include a fund worth 1 billion yuan ($142 million). 

According to Xinhua, the FTZ is aiming to “support the blockchain industry through talent cultivation, technological application, social investment and other aspects.”

The announcement sees Hainan fall in line with various other Chinese provinces which have confirmed financial support for blockchain in recent weeks and months. 

The Hainan blockchain pilot zone was China’s first when it launched in October last year. 

In general, the Hainan Free Trade Zone is a pilot economic area established by President Xi Jinping in 2018. The plan set out to make the island a free trade zone by 2020 and eventually turn into a free port by 2025. Since then, over 100 blockchain businesses have joined the Hainan Resort Software Community located there. 

Chinese investment pours in

As Cointelegraph reported, blockchain continues to be a buzzword in China after official endorsement of the technology from the government.

At the same time, figures of the country’s financial commitment appear to vary; new cash injections appear regularly, but overall long-term investment forecasts remain comparatively conservative. The latest estimates put blockchain investment at $2 billion by 2023. 

Among the latest funds to come from the local industry was another $140 million from OK Group, the parent company of cryptocurrency exchange OKCoin, cryptocurrency news outlet The Block reported on Dec. 2. Prior to that, the government of Guangzhou also said it would inject 1 billion yuan into the industry.

South Korea Telecoms Giant Ramps Up Blockchain Roaming Deal With China

South Korea’s largest telecoms provider, KT Corporation, is boosting a partnership with China Mobile targeting blockchain technology and 5G roaming.

As local English-language news outlet The Korea Herald reported on Dec. 5, KT is preparing to debut 5G roaming capabilities in China later this month. 

KT Corp. eyes B.Link blockchain rollout

At the same time, the companies are working on a blockchain system which will allow them to save time and costs when computing roaming charges for mobile users. 

According to The Korea Herald, the B.Link system is able to “self-analyze roaming data from the two carriers and can process roaming charges on a real-time basis.”

The news comes around six months after KT revealed it had built a blockchain network of its own. KT Network Blockchain similarly targets roaming, along with other use cases such as user identification.

That announcement in turn followed KT’s Blockchain-as-a-Service, or BaaS, which aims to ease access to the technology for South Korean firms. 

Telecoms embraces blockchain potential

As Cointelegraph reported, both South Korea and China have thrown their weight behind blockchain technology, the latter making it part of formal state policy in a widely-reported publicity campaign last month. 

Enthusiasm is also palpable in South Korea, with technology giant Kakao Corporation describing its Klaytn blockchain offering as being more advanced than Facebook’s Libra project in recent comments.

For the telecoms industry specifically, blockchain meanwhile should bring $1 billion of added value by 2023, according to a study published last year.

Cointelegraph Announces Chinese HQ, Bolstering Its International Expansion

To support our international expansion and global reach, Cointelegraph is delighted to announce the launch of the Chinese-language version of the publication. Today, Dec. 4, we celebrated the opening of the office of Cointelegraph China (Cointelegraph 中文).

The news — which marks another milestone moment in Cointelegraph’s growth — was announced at the Nova Global Blockchain Investment Institutions Summit hosted by the investment ecosystem alliance, Nova Club. Nova Club was formed by top blockchain organizations and aims to facilitate blockchain project development by consolidating resources and expertise.

The new expansion will be led by Vadim Krekotin from the heart of Guangzhou, with other offices in Beijing and Shanghai.

Meet the Cointelegraph China business team

Cointelegraph China has brought together leading names in the industry to highlight blockchain and crypto trends in the area. 

Kevin Shao is a co-founder of Cointelegraph China as well as a general manager at crypto mining equipment manufacturer Canaan-Blockchain. Shao’s professional background includes serving at Bank of China’s fintech and technology department.

Kevin Ren, a co-founder of Cointelegraph China and also a founding partner of venture capital firm Consensus Lab, has a double masters in computer science and business administration. Ren, who worked as a partner in a range of VC firms, currently holds managing positions at industry-wide associations and unions in the country.

Simon Li is another co-founder of Cointelegraph China and a founding partner of Chain Capital and Nova Club. Li focuses on mining, investment into blockchain projects, and initiating and managing blockchain investment funds.

Co-founder Vadim Krekotin will manage Cointelegraph China’s initial launch. He previously founded advisory blockchain firm the CBE Foundation. Vadim is fluent in Mandarin and has a long history of conducting business in China, which has brought him in contact with the country’s biggest industry players including Binance, Huobi, OkEX and many others. 

Stay tuned for editorial team

We will soon be announcing the Cointelegraph China editorial team. Our editorial team will produce the highest quality journalism for our readers in China, holding steadfast to the values of editorial independence and responsibility to our readers.

Cointelegraph China is now our third base in Asia, following the establishment of Cointelegraph Japan in Tokyo in December 2017 and Cointelegraph Korea in August of this year. China has proved itself a hub for blockchain development, with the support of President Xi Jinping and a slew of blockchain-related patents filed with local regulators.

The country is maintaining a hardline stance toward crypto, as cryptocurrency trading is wholly banned in China. Meanwhile, the country has declared plans to issue its own digital currency to compete with the United States dollar in the global market. Our China-based team will work consistently to raise awareness in the region and deliver readers a clear insight into significant industry developments.

China’s CBDC Showcases Interoperability As Centralization’s Weakness

The Asian continent and particularly China have been making news and inducing bull runs in the cryptocurrency world these past few months, starting with President Xi Jinping’s comments and progressing to crackdowns. 

The main question driving the conversation is the Chinese government’s sudden advocacy for blockchain systems and a specific interest in being the first major international power to create a national cryptocurrency, and state-sponsored blockchain solutions. 

Centralized powers contradict the decentralization movement

While the focus is on China, we must remember it is a centralized government with immense state power and, according to some, a history of governmental overreach. Their steps into cryptocurrency may create interoperability issues with public blockchains and other countries’ currencies that may not fit to state-run standards.

Xi announced particular interest in the blockchain tech and highlighted that the country is working hard and implementing feasibility studies. These plans are meant to ensure that individuals and businesses make both national and international transactions using blockchain when it makes business sense. 

The state-sponsored Bluebook

In the Chinese-sponsored Bluebook of Blockchain, it is claimed that over $110 billion yuan are involved in “black industries” such as cyber fraud, making it China’s third-largest “black industry.” 

How the government is defining cybercrime presents an issue, as it has not specified money laundering or something else of the like — just that it is a black industry. While it may seem clear at first blush, this vague designation allows for centralized entities to enact control on currency, something Bitcoin (BTC) aims to eradicate. 

According to the Bluebook, there are over 28,000 cryptocurrency companies operating in China. However, in a bull warning, the idea is not to trigger Chinese crypto enthusiasts to invest more in decentralized currencies like Bitcoin, Ether, or Ethereum Classic, but rather to bring more attention to the People’s Bank of China as they gear up to launch the first-ever central bank digital currency, or CBDC.

Related: US Fed Weighs Up Potential CBDC as Countermove Against China

Sharp Ye, a Beijing-based blockchain Partner of Boom Blockchain, a firm focused on introducing projects to China, told Cointelegraph, “China will continue to pay more and more attention to the blockchain, because this is the next point of economic growth.”

The Bluebook to crackdown

China’s blockchain plans have been in motion for some years, and the People’s Bank of China has completed a CBDC prototype. With the government’s support over the years, the bank has been able to speed up the creation and implementation of this national currency, yet is still not considered the blockchain leader when compared to the United States. 

The substantial risk to companies that have issued or will issue currencies in China is worth noting. The government has put all issuers on notice through an official announcement and can legally stifle small projects to bolster its own state-run solutions. With over 25,000 companies issuing coins, close to 3,000 are utilizing blockchain technology in their business processes and, therefore, appear to be directly at risk. Within the last year, the number of transactions made using Alibaba and WeChat pay services totaled 57 billion — significantly more than Bitcoin, Ether, and XRP put together.

The announcement from the PBoC states that, “If investors see activities and operations related to virtual currencies in any form, they can report to authorities,” thereby putting all currency issuers on notice. 

Despite government clampdowns, which directly impact market activity (something state-run media warned against), it appears that cryptocurrency is on a strong legalization path in the country following the Blueprint report. However, decentralization could potentially be sacrificed so that the technology can exist in China and be interoperable with their own currency. 

Recently, the government has banned articles and statements claiming that blockchain is a scam as well as any other sentiments that downgrade the authenticity of blockchain technology or cryptocurrency. Just within the last year, more than $5 billion dollars have been allocated to Chinese state-sponsored blockchain systems. 

Related: China’s Dive Into Blockchain, Digital ID Spurs Rest of World to Action

The administrations of individual cities and provinces have financed these funds, and interest continues to rise. Since Xi’s pro-blockchain announcement in late October, the number of searches for “blockchain” on WeChat alone has multiplied by more than 10.

Weighing crackdowns with economic concerns and stimulus 

The real issue is not in raising the acceptability of crypto, but making a CBDC function under decentralized blockchain technology. So, why exactly does the government want to create a centralized technology?

There have been many controversial comments and views of analysts and individuals since the PBoC deputy director, Mu Changchun, made the statement at China’s state-run forum, Finance 40. He indicated that the new national currency would be operated in a two-tier system, with the PBoC being on top and commercial banks allowed in the second part of the centralized system. The reasons given by the director is to enable an evenly distributed responsibility between the commercial banks and to maintain healthy competition between them. 

Of all these points, individuals as well as some analysts still believe that a centralized currency with controlled and monitored interactions does not fit the original goals of Bitcoin or blockchain technology.

Some argue that this method will not allow investors private and personalized transactions anymore, a facet that helped spur Bitcoin in the first place. With a centralized setup, the Chinese government would be able to monitor all transactions and assets of individuals, unlike a decentralized system. Others claim that this new introduction into the system is to limit the lending capability of the commercial banks and to monitor and maintain the flow of money through the system.

Tradewar uncertainties making analysts speculate

Some analysts are pointing to a more international strategy for the trade war between the U.S. and China, and they believe this national currency will give the Chinese yuan an edge over dollars in no time. China believes it can achieve the blockchain advantage over the U.S. by being swift and concise with their policies and strategies.

Related: US and China Battle for Blockchain Dominance

Facebook’s Libra is another point that many people consider the reason behind China’s CBDC as well as its centralization effects. The Chinese government wants to maintain its standard or, more likely, consolidate their usability chokepoint by controlling how money can be spent within the system. But does this mean Libra will cave to the centralized standard for interoperability with the large Chinese market? Too soon to tell.

Among all debates concerning the decentralization strategy is which public chains will be chosen. The Chinese government has shown support for BTC through scrapping its plan to ban Bitcoin mining, while it is no secret that Ethereum hopes to be interoperable with the Chinese CBDC, as co-founder Joseph Lubin spoke on the matter directly. It is no longer news that the Chinese economy has a significant influence in the digital currency market and that notable investors inside China have billions invested in Bitcoin and mining activities.

Terry Culver, CEO of ETC Labs and general partner of Digital Finance Group — a leading blockchain venture group with offices in Shanghai — stated to Cointelegraph that interoperability should be an important goal for the ecosystem: 

“Interoperability amongst the entire blockchain ecosystem is important. It leads to greater innovation, wider adoption, and thriving communities. As long as we recognize our shared values such as immutability and censorship resistance, interoperability shouldn’t be an issue.”

If the Chinese CBDC turns out to be successful and the government’s alleged centralization strategy is implemented, investors and traders may begin to look into further blockchain implementations. This mass adoption ripple effect could drastically impact the blockchain industry. 

So far, both investors and issuers have been affected by market slides due to news or speculations on the future of Chinese adoption. Although both the Chinese government and the PBoC are attempting to exert control, they will find it quite challenging to eradicate Bitcoin as well as other fully decentralized Fintech solutions from the market. 

The central bank’s largest weapon will be limited interoperability between its own currency and foreign entities operating in the country. They can also continue to crackdown on means of crypto through centralized exchanges. Still, the feasibility of interoperability with decentralized tokens is quite low.

While discussing the future with Cointelegraph, Wulf A. Kaal, Ph.D. at Kaal.io — a tech consulting firm that focuses on emerging and distributed technologies — remarked:

“China’s attempts to venture into cryptocurrencies are overall a much-welcomed development as it creates regulatory and economic competition in decentralized infrastructure solutions.”

Kaal also believes that China will be in a position to use U.S.-based open-source developments and use them to race ahead. He continued:

“It is hard to see that the Chinese government would seriously consider a truly decentralized token. We would be able to debate what “decentralized” will mean in the case of China. If we agree that “decentralized” would mean, at a minimum, a token that is censorship-resistant, autonomous, and anonymous, it is hard to see the Chinese government facilitating that.” 

Sowing the seeds of doubt

At the end of November, a crypto news service claimed that the Chinese police had shut down and raided the Binance office in Shanghai. Although the exchange’s CEO and a Malta-based spokesperson have both debunked the news, stating that Binance does not even operate a Shanghai office, the consequent social media frenzy and market panic provides cause for the Chinese government to rid itself of the concept of decentralization and establish centralized entities. 

These claims involving Binance show the risks associated with decentralization and gives the Chinese government more incentive to consolidate media and developments surrounding blockchain technology.

The effort to fight such fears must be a group effort by the decentralized community, rather than relying on the government to filter truth. For decentralized currencies, there is incentive to being interoperable with centralized currencies, but blockchain’s original intent of decentralization must be honored. 

While the idea of a decentralized system being interoperable with centralized currencies would be the best-case scenario here, the community must adhere blockchain’s founding concepts of immutability and decentralization to remain unadulterated along the way. When speaking with Cointelegraph on interoperability between centralized and decentralized systems, outspoken crypto pioneer John McAfee said:

“The Chinese, and all corporate and government coins will be nothing more than surveillance systems for your financial transactions. Don’t use them, [decentralization will live on].”

China's Great Firewall Blocks Popular ETH Block Browser Etherscan

China’s Great Firewall, a tool used to ban Chinese citizens from using sites like Google and Facebook, has listed a major explorer for Ethereum’s (ETH) blockchain.

According to data from non-profit monitoring organization GreatFire, China allegedly blocked one of the most popular ETH block browsers, Etherscan, in October 2019. As of Dec. 3, Etherscan’s domain remained inaccessible from IP addresses inside mainland China, as reported by crypto publication Coindesk on Dec. 3.

Etherscan is aware of the block, firm’s CEO says

While the Etherscan’s blockage was largely unnoticed, the firm’s CEO Matthew Tan reportedly said that Etherscan noticed the action “within the last 3 months,” Coindesk reports. Cointelegraph contacted Etherscan’s team to confirm the information but the firm hadn’t responded as of publication.

The block’s timeline

According to GreatFire, which collects a database of websites blocked by the Great Firewall, Etherscan was purportedly still intact with “no censorship detected” as of Aug. 17, 2019.

The Ethereum block browser was fully blocked by Oct. 29, 2019, while the exact time of the block is not reported by GreatFire.

Other ETH blockchain explorers still accessible in China

Meanwhile, other Ethereum block explorers are still intact in China. As reported by Coindesk, a localized version of the browser, cn.etherscan.com, is accessible to Chinese users as of press time.

A block explorer is a website or a tool that allows users to track blocks, wallet addresses, network hashrate, transaction data and other key data on a certain blockchain, like the Bitcoin (BTC) blockchain, the Litecoin (LTC) blockchain, or the Ethereum blockchain. For Bitcoin, there are a number of block explorers, including Blockchain.com, Blockexplorer.com, or Btc.com

Meanwhile, Etherscan is just one of a number of block explorers such as Etherchain.org and Ethplorer.io. In March 2019, major Ethereum wallet supplier MyEtherWallet announced the launch of the alpha version of its new open-source Ethereum blockchain explorer, EthVM.

PlusToken Effect: Alleged Asian Exit Scam to Blame for Market Decline?

In the last week of November, the saga of an alleged crypto Ponzi scheme that has been lingering for more than half a year took a new turn. A hobbyist blockchain researcher reported on Twitter that he’d tracked almost 200,000 BTC that had gone missing over the summer, when several million people invested in PlusToken — a South Korea-based exchange and a high-yield investment program — found themselves unable to withdraw their money. 

The researcher suggested that the embezzled funds have been gradually dumped on crypto exchanges, potentially suppressing Bitcoin market price. Here’s what is known about the monumental scheme that has yet to be officially confirmed.

The greatest exit scam in history

The story of PlusToken is a testament to the fundamental disconnect in contact between the Asian and Western crypto spaces. The platform is believed to have been holding almost $3 billion worth of assets like Bitcoin, Ethereum and EOS when it essentially went bust in June 2019 — and yet, it was not until Aug. 13, when blockchain analytics firm Ciphertrace published its Q2 report, that the story caught the Western audience’s attention.

Even after the true scale of the scheme became evident, it seemed that the collective West was getting updates through a rather narrow bottleneck. Dovey Wan, founding partner of blockchain investment company Primitive Ventures, has become a key source of information on the alleged scam.

Related: What Are the Biggest Alleged Crypto Heists and How Much Was Stolen?

Launched in May 2018, PlusToken offered both a wallet service to store cryptocurrencies and an investment program promising high monthly returns on stored funds, between 8% and 16%. It was primarily marketed in China and South Korea, although Wan reported that the exchange’s customers were also located in Europe and even North America. While the operation boasted a user base of ten million, Ciphertrace estimates that up to 3 million people may have been invested.

The scheme reportedly targeted a mainstream audience of people not particularly savvy with crypto, emphasizing the “educational” component of the operation, which came down to teaching new members how to deposit funds via the PlusToken app. 

A telltale sign of a Ponzi scheme was also present: The size of rewards was contingent on recruiting new investors. Members could progress through the internal hierarchy accordingly, earning honorable distinctions such as “Big Boy” and “Great God.” The aggressive expansion campaign also partly relied on lively offline gatherings.

In late June, customers learned that withdrawals via the app were frozen. Around the same time, law enforcement in Vanuatu took action to detain six people involved with the scheme. An announcement immediately appeared on the PlusToken website, stating that the arrested individuals were regular users and not co-founders.

While the six allegedly high-ranking members of the operation found themselves in custody, other purported PlusToken bosses, including a Korean and a Russian, remained at large. The whereabouts of almost $3 billion worth of cryptocurrency remained opaque as well.

Money on the move

On Aug. 14, news emerged that the funds associated with PlusToken were being moved to exchanges. Wan was the one to raise the alarm, citing research by security audit firm PeckShield. A few days later, crypto watchdog Whale Alert pointed to four transactions totaling almost 23,000 BTC that were likely PlusToken proceeds. 

However, both claims lack conclusive evidence. Ciphertrace, for instance, refrained from publicly acknowledging that the addresses identified by PeckShield may have belonged to the operation.

On Aug. 23, blockchain research firm Elementus suggested that large sums of Ether associated with the alleged exit scam were also transferred to exchanges, predominantly Huobi. Yet, after this uptick in research and media attention, the issue seemed to have gradually faded from the spotlight.

Related: Criminal Activity in Crypto: The Fact, the Fiction and the Context

Three months later, what can be made out of the new wave of media attention to the matter? Granted, it was not until late November that members of the crypto community first came to suspect that the spoils from the PlusToken scheme could exert considerable selling pressure on the market. According to reports from sources versed in Chinese trader circles, the narrative of the swindled funds’ sell-off driving the Bitcoin price downward has been circulating since at least mid-August.

What’s new is a piece of solid-looking research that emerged in the wake of the latest downward turn in the BTC price cycle. Conducted by a crypto enthusiast who goes by Ergo on Twitter and Medium, the analysis connects some dots in the PlusToken plot by tracing the funds allegedly associated with it and estimating the average pace at which they get dumped into the market.

Coins poorly mixed

Although Ergo presented his recent findings as a series of tweets rather than a more formal writeup, the inquiry builds on the analyst’s previous work reported in a Medium post that appeared on Oct. 23. 

The post is a record of the suspicious large-scale activity that the author observed between early August and mid-September. Someone had been depositing huge amounts of Bitcoin into the privacy-focused Wasabi wallet service, which allows several users to mix their digital funds in a single transaction, thus obfuscating the origin of individual coins. Some of the addresses could be traced to individuals already linked to PlusToken.

The analyst described what he saw as “Sybil behavior,” as opposed to a Sybil attack. In both cases, the basic mechanism is that one entity poses as many different ones. If malicious intent toward the service informs such actions, they qualify as an attack, but in this instance, the whale was merely using multiple mixing clients to create the appearance that the money came into a mixer from multiple users. In an attempt to further becloud transaction history, the people in control of the money flows also employed a distinct algorithmic technique known as “self-shuffling.”

According to Ergo, however, “self-shuffling” is actually a traceable process, and the Wasabi mixing was poorly performed, leaving identifiable trails in the form of recurring patterns of post-mix spending. By late October, the researcher was able to track some 54,000 out of the alleged 200,000 BTC linked to the PlusToken scheme that were mixed using these two techniques. The bulk of this sum then went to the Huobi exchange.

Further developments

The tweetstorm that came a month later reports the findings of the continued research effort. Ergo had tracked several more clusters of Bitcoin allegedly linked to PlusToken, bringing the uncovered money total to 187,000 BTC — a figure approaching the estimate of the filched funds.

Assuming early August as the starting point of the sell-off, he also estimated the consequent daily excess of Bitcoin at an average of 1,300 BTC — an amount that looks substantial enough to exert downward pressure on the cryptocurrency’s market price. A few days later, Ergo followed up with an observation that some of the alleged PlusToken-related coins were being further moved from Huobi to Gemini.

One thing that this remarkable investigation falls short of, however, is doing away with what is alleged and instead stating facts before any reference to PlusToken is made in relation to the tracked funds. The starting point of the analysis is a handful of addresses that are widely believed to belong to the PlusToken operation, yet there is neither conclusive evidence nor a firm consensus that this is the case.

Moving from the realm of the probable to a firmer factual ground would require a new piece of indisputable evidence coming to light, most likely originating from law enforcement. For now, the analysis conducted by a lone crypto enthusiast is likely the best the community has to offer in the way of understanding what really happened behind PlusToken’s shiny facade.

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