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French group blames China-founded crypto platform for missing millions

Image: Reuters.

Binance – one of the world’s two biggest digital money exchanges, along with Coinbase in the US – rejected claims it made bitcoin assets vanish

(AF) French police are investigating claims that tens of millions of euros worth of crypto assets vanished from the books of an association representing hundreds of investors.

RR Crypto, a digital asset specialist based near Dijon in central France, at the weekend informed its members that all the money they had invested was gone, blaming a technical glitch.

According to media reports, the total loss amounts to between 40 million and 58 million euros ($48-69 million).

RR Crypto, which is not registered with France’s financial markets regulator, said that it traded assets on the Binance platform that specialises in crypto assets.

Binance, founded by Chinese entrepreneur Changpeng Zhao, said it had no record of any RR Crypto company account.

News channel BFMTV said “that it’s impossible to know whether the funds were deposited under another name, or whether the portfolio was a complete fiction”.


Police are investigating for suspected gang theft, breach of protected data, and money laundering.

On Sunday, RR Crypto founder Vincent Ropiot told some of its members that their assets had “disappeared” without a trace when Binance “rebooted” RR Crypto’s account, according to Le Journal du Coin and local newspaper Le Bien Public, which first reported the case.

But Binance – one of the world’s two biggest cryptocurrency exchanges, along with Coinbase in the US – said it has no process to ‘reboot’ registered funds.

Binance was initially based in China, but later moved its headquarters to the Cayman Islands, a tax haven, due to Beijing’s increasing regulation of cryptocurrency.

Crypto assets have seen a sharp drop recently from dizzying heights reached in the first half of the year.

Flagship digital currency bitcoin fell on Tuesday below $30,000 for the first time since January, down from its high of $64,870 reached in April. It has since climbed back above $30,000.


In related crypto news, Fitch Ratings has said recent consultation on the prudential treatment of banks’ crypto asset exposures from the Basel Committee on Banking Supervision (BCBS) would provide a much needed regulatory framework, as banks around the world are exploring potential risks and rewards from increasing exposure in this rapidly evolving asset class.

The BCBS proposal recommends a differentiation in the prudential treatment of crypto assets. Tokenised traditional assets would be eligible for the same capital requirements as the underlying assets if they confer similar legal rights, Fitch Ratings said.

The prudential treatment of fully reserved crypto assets with stabilisation mechanisms such as stablecoins would aim to capture the risks of the underlying assets and of the unsecured commitment of the entity that exchanges the crypto asset for its underlying assets or cash. An add-on operational risk charge could apply for these types of crypto assets, it said.

The BCBS’s proposals explicitly exclude treatment of central bank digital currencies (CBDC), which, if introduced, would likely have similar risk profiles to central bank cash.

Fitch said the proposed treatment of tokenised traditional assets or those with a stabilisation mechanism was not expected to hinder developments of new transaction and settlement technology, which could improve the liquidity of some assets and reduce transaction costs.


“Increased oversight requirements related to the transfer and settlement of crypto assets could also reduce operational risks related to these assets,” Fitch said.

“Crypto assets that cannot be classified as tokenised traditional assets or that have no stabilisation mechanism would attract a much higher risk-weight of 1,250% to reflect their significantly higher risks to banks, owing to their volatility and opacity. This treatment would be applied to crypto-currencies such as bitcoin and ethereum, which would also not be considered as redeemable within 30 days for the calculation of the regulatory liquidity coverage ratio,” the rating agency added.

To avoid higher capital requirements, banks holding stablecoin would be required to monitor daily the difference in value to the underlying pool of assets and to perform a detailed assessment of the stabilisation mechanism, which would exclude newly established crypto assets. Banks would also be required to verify ownership rights of the underlying pool of traditional assets, with classification requiring formal approval from supervisors.

“The associated regulatory burdens of this exposure are likely to discourage banks from holding stablecoins, especially those issued by third parties as the bank has little control over the underlying reserve pool and stabilisation mechanism,” Fitch said.

Banks’ exposure to crypto assets remains small according to the BCBS.

In a communique following the G7 meeting earlier this month, finance ministers and central bank governors stressed that global stablecoins should adhere to strict standards and should not begin operation until relevant legal, regulatory and oversight requirements are adequately addressed.

With reporting by Jim Pollard and Agence France-Presse


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George Russell

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, The Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and the South China Morning Post.


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