World

'True democracy never started': Hong Kongers react to Xi's speech

As Chinese leader Xi Jinping left Hong Kong Friday after a rare visit to celebrate the 25th anniversary of the city’s handover from Britain, reactions to his speech ranged from deeming it “reassuring” to terming his stance “delusional”.

The Chinese Communist Party places great importance on anniversaries, and the trip presented Xi with an opportunity to emphasise China’s authority over Hong Kong after three years of political upheaval there.

“Xi’s speech and language reiterated the political message to Hong Kong since the national security law,” political scientist Kenneth Chan from Hong Kong Baptist University told AFP. 

“Beijing now exercises total control over the city through the loyalists.” 

Since China imposed a national security law on the city following huge pro-democracy protests that engulfed the city in 2019, dissent has been stifled in the once politically vibrant city. 

Xi’s insistence that democracy was flourishing despite the years-long political crackdown was met with scorn by those who had been most affected by Beijing’s tightening grip on the city. 

Ted Hui, a former opposition lawmaker who fled overseas in 2020 after being arrested multiple times, said Xi’s remark that “true democracy” only began after the handover was “a lie”. 

“As early as the 1970s and 1980s, Hong Kong people had started our own democracy movement, and begun to develop our civil society,” he told AFP. 

He said that under British rule the city had never had full democracy, but that now “we have lost both the formality and the substance of democracy, particularly after the implementation of the national security law”. 

One of his former colleagues, Emily Lau, said that “true democracy never started in Hong Kong –- neither before or after 1997”. 

She agreed that now, the city had “lost both freedoms and democracy”.

– ‘Clear and solid’ –

After waving Xi off at a high-speed train station, new Hong Kong Chief Executive John Lee said the visit had been “inspiring”. 

Xi said repeatedly that One Country, Two Systems — the governance model agreed by Britain and China under which the city would keep some autonomy and freedoms — was working well and did not need to change. 

Lee said Xi’s remarks were a “very clear and very solid” declaration. 

The sentiment was echoed by Hong Kong’s Law Society, which put out a statement saying Xi’s “clear reassurances and inspirational directions on the well-being of Hong Kong and our integration into the overall development of our country were encouraging”. 

Hui was scathing of the idea that the governance model was working well. 

“I think it’s delusional to say that Hong Kong can continue to maintain its unique advantages under the current system,” he said. “Because Hong Kong’s uniqueness used to lie in its liberty, its autonomy in policy making.”

On Hong Kong’s streets, wet from thunderstorms that pummelled the city all day Friday, 46-year-old Jonathan Yeung said Xi’s position that One Country, Two Systems had no reason to change was “laughable”. 

“He was behind the biggest changes,” he said.  

“(Xi’s) speech was just a to-do list for John Lee, I don’t think he was addressing Hong Kongers like me.” 

A jewellery shop owner surnamed Wan, 44, said he thought it was good Xi had set out clear priorities for the next administration. 

He agreed with Xi’s sentiment that Hong Kong “could not afford to fall into chaos”. 

“The past few years were very tough, no matter one’s politics and occupation,” Wan said. 

In his speech, Xi put particular emphasis on young people, saying that authorities “must enhance their national pride and sense of ownership”.

A man surnamed Lee, a 19-year-old university student, was unimpressed by Xi’s exhortations.

“When he says more focus on youth, that only means more nationalistic agenda being pushed in schools,” he told AFP. 

“He doesn’t care what young people themselves want.” 

Japan warns on 'interests' after Russia gas project decree

Japan’s energy “interests must not be undermined”, Tokyo said Friday, after Moscow issued a decree transferring operations of a key oil and gas project to a new Russian company.

Japanese trading houses Mitsui and Mitsubishi Corp own 12.5 and 10 percent stakes respectively in the Sakhalin-2 project, but the future of their investments appears uncertain after the Russian move.

The decree calls for the establishment of a new Russian operator and requires existing foreign shareholders to apply for the right to participate in the new firm, with Moscow deciding on their inclusion.

Japanese government spokesman Seiji Kihara said Friday morning that Tokyo was “closely examining the impact on liquified natural gas (LNG) imports”.

“Speaking generally, we believe our resource interests must not be undermined,” he added, declining to give further comment.

Later Friday, Prime Minister Fumio Kishida said the government did not think the decree “will immediately stop LNG imports,” on which Japan is heavily dependent.

“We think we need to carefully monitor how the decree will affect our contract,” he told reporters.

Japan’s economy minister meanwhile said Tokyo would look into alternative suppliers.

“In the mid-to-long term, we will do everything we can to ensure a stable supply of energy, including through alternative procurement from LNG suppliers other than Russia, buying from the spot market, and reducing demand when necessary,” Koichi Hagiuda told journalists.

He said Japan would also look into boosting renewable and nuclear energy, which remains controversial in the country after the 2011 Fukushima disaster.

The Russian decree says the move is a reaction to the “unfriendly actions” of countries that are imposing “restrictive measures” on Russia over its invasion of Ukraine.

It warns the Russian government will carry out a “financial, environmental and technical audit” of foreign stakeholders and identify any “damages” they have caused.

Those accused of such damages may be obliged to pay unspecified compensation, it adds.

Energy resource-poor Japan relies heavily on LNG imports and had previously ruled out withdrawal from the Sakhalin-2 project despite joining Western-led energy sanctions on Russia over the invasion of Ukraine.

Spokesmen for Mitsubishi and Mitsui would say only that the firms were examining the details of the decree in coordination with the government.

The other major stakeholder in the project is oil giant Shell, which has already committed to selling its 27.5 percent stake.

“As a shareholder, Shell has always acted in the best interests of Sakhalin-2 and in accordance with all applicable legal requirements,” the British group said Friday. 

“We are aware of the decree and are assessing its implications,” it added.

Shell in May announced it had taken a hit totalling $1.6 billion linked to Sakhalin-2.

Japan is heavily dependent on imported fossil fuels, in part because many of its nuclear reactors have been offline since the Fukushima disaster.

Russia supplies nearly nine percent of Japan’s LNG demands, with Australian exports accounting for about 40 percent of the market.

Japan is currently sweltering through a record heatwave and the government has warned several times in recent days of a power crunch in the Tokyo region.

On Friday, it began a three-month period in which it is asking residents to conserve power, with fears of shortages during the summer heat.

burs-sah/bcp/rfj/ssy

'American Woman' rocker reunited with stolen guitar… 46 years on

They say you never forget your first love, and after pining for his stolen guitar for almost half a century, Canadian rock star Randy Bachman has finally been reunited with the instrument which an eagle-eyed fan tracked down in Japan.

Bachman, who wrote the original “American Woman” with his band The Guess Who, was in Tokyo for the emotional handover on Friday — 46 years after his cherished orange Gretsch was snatched from a Toronto hotel.

“Wow,” a stunned Bachman said, holding the guitar lovingly and tuning it up on stage before playing in a special concert at the Canadian Embassy.

The 78-year-old told AFP he had been “pretty much devastated” by the theft.

“With that guitar, I wrote many million-selling songs… it was like my magical guitar. And then when it’s suddenly gone, the magic is gone.”

The rocker bought the now vintage 6120 Chet Atkins model as a teenager in the early 1960s with $400 painstakingly saved up from mowing lawns, washing cars and babysitting.

He had long admired the instrument, spending hours staring at it in a shop window in Winnipeg with his friend and fellow musician Neil Young.

It meant so much to Bachman that he would chain it to hotel toilets on tour. “Everybody in the band made fun of me, but because I worked so hard to get this guitar, I didn’t want it stolen.”

But in 1976, he entrusted the guitar to a roadie who put it in a room with other luggage while the band was checking out.

Before they knew it, it was gone.

– Some sleuthing and a handover –

Over the decades, Bachman hunted for his Gretsch, which has a small, dark knot in the wood grain on its front, but to no avail — until a Canadian fan decided to help with the search from his home in 2020.

William Long compared old images of the stolen instrument with new and archived pictures of the model on guitar shop websites around the world.

“Yeah, I’m a sleuth,” Long, 58, told AFP. “I was confident I was going to find it. I got the process down so quick — I went through 300 images of orange Gretches.”

None were a perfect match, until he found one on the site of a Tokyo guitar shop with the tell-tale mark.

More searching pointed Long to a Japanese musician called Takeshi, who he spotted playing Bachman’s beloved guitar in a YouTube video.

Takeshi, who had always wanted a vintage Gretsch, says he bought Bachman’s guitar in 2014 for around 850,000 yen ($6,300).

Long alerted Bachman to his discovery, and the musicians arranged to meet in Tokyo to swap Bachman’s original guitar with another of the same type, also made in 1957.

On Friday, at an event held on Canada Day, the pair shared a big hug and then jammed together.

They performed songs including “American Woman”, the 1970 hit later covered by US singer Lenny Kravitz, and “Takin’ Care of Business” by Bachman’s other band, Bachman-Turner Overdrive.

Bachman is not the only rock star to be reunited with a long-lost guitar: last year, Led Zeppelin’s Jimmy Page also tracked one down that went missing at an airport decades ago.

But Bachman, who had given up ever finding the guitar after four decades of searching, said he had been touched by Long’s “random act of kindness”.

“When I was playing it, I looked down and figured -– time has stood still, or 50 years has just flown by really fast,” he said. 

“I couldn’t have written this if I wrote it as a script. Nobody would believe it. But it’s true. It’s really great.”

Metaverse years from being global phenomenon, says pioneer

Big brands are rushing to the metaverse but the path to profit is still unclear and mass adoption may be years away, one of the sector’s biggest players, Sebastien Borget, told AFP in an interview.

Borget is co-founder of The Sandbox, a platform that began life as a game for mobile phones and PCs but is transforming itself into a virtual world where anyone can buy land in the form of digital tokens.

Fashion brands like Gucci and Adidas, financial firms Axa and HSBC, and Warner Music are among those who have already chosen to set up shop in The Sandbox.

“Above all, it is a place for creativity and experience,” said Frenchman Borget, distancing himself from the idea that it is simply a commercial venture.

“Brands don’t go there to monetise, we don’t know how to do that.”

Enthusiasts are convinced that internet users in the near future will shop, mingle with friends or go to concerts in platforms like The Sandbox or its main competitor Decentraland.

Users will strap on virtual reality headsets, buy and sell in cryptocurrencies and have all their transactions stored on the blockchain — a kind of digital ledger.

At least that is the theory.

– Digital owners –

The Sandbox is still largely a quest game where players hop through landscapes illustrated in block graphics, collecting treasures and vanquishing enemies.

Players are also encouraged to build their own worlds and invent games.

The metaverse version — where players largely do the same thing but can earn cryptocurrency rewards and buy extra kit for their avatars — has only opened to the public for special events.

Some 350,000 people visited during its last opening in March, said Borget, far short of his aim to attract “hundreds of millions”. 

“We hope to achieve this within five to 10 years,” he said.

But there is still plenty of public scepticism about the metaverse and the wider web3 phenomenon — an idea for a blockchain-based internet centred on individuals rather than big social media platforms.

Cryptocurrency trading underpins the commercial side of web3, but the main coins are wildly unstable and transactions can suck up a huge amount of energy.

The crypto ecosystem is largely unregulated, has gaping security flaws and little in the way of insurance, leaving users open to fraud and scams.

But Borget is confident that the offer of a space for individuals to socialise, trade, play — and crucially own their digital footprint — will win out.

“For the first time, users have ownership of their digital content,” he said. 

“The avatar, the wearables, the equipment, the land, the houses… everything belongs to them. They can dispose of it as they want.”

– Early adopters –

Despite his focus on the social and creative aspects, The Sandbox has a clear commercial motive.

It takes five percent commissions on all transactions as well as pocketing profit from the sale of virtual land. Its revenue was $200 million last year.

Plenty of major companies have jumped in, Borget highlighting that The Sandbox has only 166,464 plots of virtual land on offer.

“This map has a finite number of plots, which is not the case for all decentralised virtual worlds,” said Borget. 

“We have sold 70 percent of them so far.”

The firm’s sales of virtual land topped $500 million last year and Borget claimed his metaverse had 64 percent market share.

But Borget said brands were still searching for the best way to develop their virtual shops and offices.

“Brands were slow to embrace the web,” he said. 

“With web3 they are trying to get in a little earlier so as not to repeat their past mistakes.”

War in Ukraine: Latest developments

Here are the latest developments in the war in Ukraine:

 – Deadly strike on Odessa – 

At least 18 people are killed and dozens wounded in missile strikes on Ukraine’s Odessa region.

The strikes come a day after Russian troops abandoned positions on the strategic Snake Island off the coast of Odessa.

Early Friday the missiles hit a nine-storey apartment building and a recreation centre about 80 kilometres (50 miles) south of Odessa, emergency services say.

– Snake Island decision ‘changes situation’: Zelensky –

Russia’s decision to abandon Snake Island “changes the situation in the Black Sea considerably”, Ukrainian President Volodymyr Zelensky says.

“It does not yet guarantee security. It does not yet guarantee that the enemy will not return. But it already considerably limits the actions of the occupiers,” he says Thursday in his daily address.

A strategic target, Snake Island sits aside shipping lanes near Odessa port. Russia had attempted to install missile and air defence batteries while under fire from drones.

Britain’s Ministry of Defence says in its latest intelligence update Russia has highly likely withdrawn “owing to the isolation of the garrison and its increasing vulnerability to Ukrainian strikes, rather than as a ‘gesture of good will’, as it has claimed.”

The Russian defence ministry  on Thursday described the retreat as “a gesture of goodwill” meant to demonstrate that Moscow will not interfere with UN efforts to organise protected grain exports from Ukraine.

– Lysychansk pounded –

The city of Lysychansk in Ukraine’s eastern Donbas region continues to come under sustained bombardment, Sergiy Gaiday — governor of the Lugansk region, says. 

Capturing the city would allow the Russians to push deeper in the industrial Donbas, which has become the focus of their offensive since failing to capture Kyiv after their February 24 invasion.

“Residents of Lysychansk barely leave their basements and homes,” Gaiday writes on Telegram. 

The Russians had taken control of parts of the city’s oil refinery, he says. 

– EU chief warns Ukraine on corruption –

European Commission President Ursula von der Leyen tells Ukraine’s parliament that EU membership is “within reach” but urges them to press forward with anti-corruption reforms.

“You have created an impressive anti-corruption machine,” she tells lawmakers by video link. “But now these institutions need teeth, and the right people in senior posts.”

Ukraine applied for EU membership just five days after Russia’s February 24 invasion and the 27 member states accepted its candidacy on June 23, in a strong signal of support.

But the accession process could take many years.

She stressed that Brussels and the EU member states were firmly behind Ukraine in both its battle with the ongoing Russian invasion and the quest to be “reunited with our European family”.

But she also insisted on the need to build on reforms already introduced since Ukraine’s 2014 revolt against its previous government to battle corruption and the grip of oligarchs on its economy.

– Ukraine exports electricity to EU –

Ukraine has started exporting electricity to the EU via Romania, President Zelensky says, as Russia reduces gas supplies to the bloc.

Several European countries, highly dependent upon Russian gas for their energy needs, have been forced to look for alternatives as Moscow slashes deliveries in response to their support for Ukraine.

“This is only the first stage. We are preparing to increase supply,” Zelensky says, adding “a significant part of the Russian gas consumed by Europeans can be replaced”.

burs-jmy/yad

17 dead in southern Ukraine strikes, after Russia quits Snake Island

At least 17 people were killed and dozens wounded Friday in missile strikes on Ukraine’s Odessa region, a day after Russian troops abandoned positions on a strategic island in a major setback to the Kremlin’s invasion. 

The news came after NATO leaders wrapped up a summit in Madrid, with US President Joe Biden announcing $800 million in new weapons for Ukraine.

“We are going to stick with Ukraine, and all of the alliance are going to stick with Ukraine, as long as it takes to make sure they are not defeated by Russia,” he said.

Russian Foreign Minister Sergei Lavrov compared surging diplomatic tensions to the Cold War, telling reporters: “As far as an Iron Curtain is concerned, essentially it is already descending… The process has begun.”

There was a glimmer of hope however, when Indonesian President Joko Widodo said he had given Russian President Vladimir Putin a message from their Ukrainian counterpart, Volodymyr Zelensky.

It came after Widodo visited both Moscow and Kyiv. Neither side has revealed what was in the note.

Early Friday, missiles were fired at an apartment building and recreation centre about 80 kilometres (50 miles) south of the Black Sea port of Odessa, which has become a strategic flashpoint in the conflict. 

The nine-storey apartment building was partially destroyed, leaving 14 people dead and 30 wounded, the emergency services said. 

Three people, including a child, were killed and one wounded in the attack on the recreation centre, they said.

The strikes, in Bilhorod-Dnistrovskyi, were launched by aircraft that flew in from the Black Sea, said Odessa military administration spokesman Sergiy Bratchuk.

“The worst case scenario played out and two strategic aircraft came to the Odessa region,” he said in a TV interview, adding they had fired “very heavy and very powerful” missiles. 

Earlier this week, there was global outrage when a Russian strike destroyed a shopping centre in Kremenchuk, central Ukraine, killing at least 18 civilians. Putin has denied Moscow’s forces were responsible.

– ‘Goodwill gesture’ –

Friday’s attacks came a day after Russian troops abandoned their positions on Snake Island, off the coast of Odessa.

The island had become a symbol of Ukrainian resistance in the first days of the war, when the rocky outcrop’s defenders told a Russian warship to “go f*ck yourself” after it called on them to surrender — an incident that spurred a defiant meme.

It was also a strategic target, sitting aside shipping lanes near the port of Odessa. Russia had attempted to install missile and air defence batteries while under fire from drones.

The decision to abandon Snake Island “changes the situation in the Black Sea considerably”, Zelensky said in his daily address Thursday.

“It does not yet guarantee security. It does not yet guarantee that the enemy will not return. But it already considerably limits the actions of the occupiers.”

The Russian defence ministry statement described the retreat as “a gesture of goodwill” meant to demonstrate that Moscow will not interfere with UN efforts to organise protected grain exports from Ukraine.

In peacetime, Ukraine is a major agricultural exporter, but Russia’s invasion has damaged farmland and seen Ukraine’s ports seized, razed or blockaded — sparking concerns about food shortages, particularly in poor countries.

Western powers have accused Putin of using the trapped harvest as a weapon to increase pressure on the international community, and Russia has been accused of stealing grain. 

– Donbas under fire –

On Thursday, a ship carrying 7,000 tonnes of grain sailed from Ukraine’s occupied port of Berdyansk, said the regional leader appointed by the Russian occupation forces.

Evgeny Balitsky, the head of the pro-Moscow administration, said Russia’s Black Sea ships “are ensuring the security” of the journey, adding that the port had been de-mined.

The conflict in Ukraine dominated the NATO summit in Madrid this week, as the alliance officially invited Sweden and Finland to join, and Biden announced new deployments of US troops, ships and planes to Europe.

Russian missiles continued to rain down elsewhere in Ukraine, with the city of Lysychansk in the eastern Donbas region coming under sustained bombardment. 

Capturing the city would allow the Russians to push deeper in the Donbas, which has become the focus of their offensive since failing to capture Kyiv after their February invasion.

Sergiy Gaiday — governor of the Lugansk region, which includes Lysychansk — said the city continued to face heavy shelling. 

“Residents of Lysychansk barely leave their basements and homes,” he wrote on Telegram, adding fires had broken out in houses and shopping malls. 

The Russians had taken control of parts of the city’s oil refinery, he said. 

Ukraine was recently granted “candidate status” by the European Union as it pushes to join the bloc, although membership is likely still years away. 

On Friday, the president of the European Commission Ursula von der Leyen told Ukraine’s parliament that membership was “within reach” but urged them to press forward with anti-corruption reforms.

Zelensky meanwhile announced Ukraine had begun exporting electricity to the EU, via Romania, as fears grow of an energy crisis in Europe due to reduced Russian gas deliveries. 

Horseshoe crabs: 'Living fossils' vital for vaccine safety

On a bright moonlit night, a team of scientists and volunteers head out to a protected beach along the Delaware Bay to survey horseshoe crabs that spawn in their millions along the US East Coast from late spring to early summer.

The group make their way up the shoreline laying a measuring frame on the sand, counting the individuals inside it to help generate a population estimate, and setting right those unfortunate enough to have been flipped onto their backs by the high tide.

With their helmet-like shells, tails that resemble spikes and five pairs of legs connected to their mouths, horseshoe crabs, or Limulidae, aren’t immediately endearing.

But if you’ve ever had a vaccine in your life, you have these weird sea animals to thank: their bright blue blood, which clots in the presence of harmful bacterial components called endotoxins, has been essential for testing the safety of biomedical products since the 1970s, when it replaced rabbit testing.

“They’re really easy to love, once you understand them,” Laurel Sullivan, who works for the state government to educate members of the public about the invertebrates, tells AFP.

“They’re not threatening at all. They’re just going about their day, trying to make more horseshoe crabs.”

For 450 million years, these otherworldly creatures have patrolled the planet’s oceans, while dinosaurs arose and went extinct, and early fish transitioned to the land animals that would eventually give rise to humans.

Now, though, the “living fossils” are listed as vulnerable in America and endangered in Asia, as a result of habitat loss and overharvesting for use in food, bait, and the pharmaceutical industry, which is on a major growth path, especially in the wake of the Covid pandemic.

Recruiting citizen scientists helps engage the public while also scaling up the government’s data collection efforts, explains the survey project’s environment scientist Taylor Beck.

– Vital ecological role- 

“Crabs” are something of a misnomer for the animals, which are in fact more closely related to spiders and scorpions, and are made up of four subspecies: one that inhabits the Eastern and Gulf coasts of North America, and the other three in Southeast Asia.

Atlantic horseshoe crabs have 10 eyes and feed by crushing up food, such as worms and clams, between their legs then passing the food to their mouths.

Males are noticeably smaller than females, whom they swarm in groups of up to 15 when breeding. Males grasp females as they head to shore, where the females deposit golf ball-size clusters of 5,000 eggs for the males to spray their sperm on.

Millions of these eggs, tiny green balls, are inadvertently churned up onto the beach surface, where they are a vital food source for migrating shorebirds, including the near-threatened Red Knot.

Nivette Perez-Perez, manager of community science at the Delaware Center for the Inland Bays, points out a vast band of eggs that stretch nearly the whole beach at the James Farm Ecological Preserve.

As she gestures, aptly-named laughing gulls with bright orange beaks swoop down to feast. 

Like others in the area, Perez-Perez long ago succumbed to the crabs’ charms. 

“You’re so cute,” she tells a female she has picked up to point out its anatomical features.

– Just flip ’em –

 

Breeding is a dangerous business for horseshoe crabs as it’s on the beach that they are at their most vulnerable: as the tide washes in, some end up on their backs, and while their long hard tails can help some right themselves, not all are so lucky. 

Around 10 percent of the population is lost each year  as their exposed undersides bake in the Sun.

In 1998, Glenn Gauvry, founder of the Ecological Research & Development Group, helped start the “Just flip ’em” campaign, encouraging members of the public to do their part by gently picking up upturned crabs that are still alive.

“Where it matters most of all, is changing the heart,” he tells AFP on Delaware Bay’s Pickering Beach, proudly sporting a “Just flip ’em” baseball cap festooned with horseshoe crab pins.

“If we can’t get people to care and to connect to these animals, then they’re less likely to want legislation to protect them.”

Every year around 500,000 horseshoe crabs are harvested and bled for a chemical called Limulus Amebocyte Lysate, vital for testing against a type of bacteria that can contaminate medications, needles and devices like hip replacements.

Estimates place the mortality rate of the process at 15 percent, with survivors released back to sea.

A new synthetic alternative called recombinant factor C appears promising, but faces regulatory challenges. 

Horseshoe crabs are a “finite source with a potentially infinite demand, and those two things are mutually exclusive,” Allen Burgenson, of Swiss biotech Lonza, which makes the new test, told AFP.  

Crypto lending world sways under risk and turmoil

Starting with the lofty goal of competing with traditional banks, cryptocurrency lending giants and their clients now face financial ruin due to their appetite for risk and a paucity of regulatory guardrails.

Celsius Network, which suspended withdrawals in mid-June, had advertised a seemingly difficult-to-reconcile mix of interest rates, charging just 0.1 percent for loans, but paying more than 18 percent on deposits.  

Weeks later, savings accounts, that amounted to $11.8 billion in mid-May, remained frozen.

“Celsius is going bankrupt one way or another,” said Omid Malekan, a professor at Columbia University. “Even if they recoup 98 cents on the dollar for their depositors, no one would ever want to use it.” 

Since then, other operators have faced a similar fate, from CoinFlex to Babel Finance, which also tried their hand at lending and had to freeze withdrawals, while Voyager Digital had to limit them.

These platforms allowed clients to deposit cryptocurrencies, and either receive interest or borrow digital money by using their savings as collateral. 

“It’s a real shame things got to this point,” said one Celsius user contacted on the Reddit platform, who claimed to have over $350,000 tied up on with the lender.

“Clearly Celsius should have planned for this kind of scenario,” the user added, speaking on condition of anonymity.

The devastating sequence started with the sharp decline of cryptocurrencies, including bitcoin which lost nearly 60 percent of its value in the past six months.

The plummeting value — which dropped as global inflation accelerated and Russia’s invasion of Ukraine rattled the world economy — led to a chain reaction and forced borrowers to provide new financial guarantees or immediately repay loans.

Some borrowers, such as the Singaporean investment firm Three Arrows Capital which is now in liquidation, could not provide the creditors enough cash to cover withdrawals and froze client accounts.

“The majority of these companies had provided uncollateralized or undercollateralized loans,” said Antoni Trenchev, co-founder of Nexo, another crypto platform that he said avoided trouble by following a stricter lending policy and “prudent risk management.” 

Unlike banks, these lenders were not required to hold cash in reserve against bad loans.

– ‘Deep need for regulation’ –

A handful US states have opened or expanded investigations into Celsius, and some, including Alabama, last year ordered the platform to stop lending to their residents.

“I do expect there to be a very strong crackdown across the board,” Malekan said. “There’s a lot of fodder there for governments to go after.”

Despite the turbulence, most observers expect cryptocurrencies to recover from the current lending trouble and don’t believe this spells an end for loans in the sector. 

“It’s not the worst crisis crypto has had,” said Charles Jansen at S&P Global Ratings. 

Malekan said the situation offers an opportunity to weed out weaker firms.

“During a bear market, you learn which were the projects that have a core value proposition and solve an actual problem, versus which are the ones that were just a pipe dream.”

Some, like Trenchev, expect a major consolidation in the sector with healthy operators gobbling up those that are struggling.

The episode also has raised awareness of the risks of a lack of government oversight. 

“There is a deep need for regulation, which is something that everybody in the field agrees on,” said Jansen, whose company is vying to be recognized as risk assessor in the crypto world.

In the absence of a specific regulatory framework market watchdog, the Securities and Exchange Commission, has been taking the lead but largely with punitive steps.

Several bills have been introduced in the US Congress in recent months that aim to address the need for closer oversight, but a bipartisan Senate proposal from Republican Cynthia Lummis and Democrat Kirsten Gillibrand has been gaining momentum. 

The bill has been well received by the crypto community, especially because it empowers the sector’s preferred regulator, the Commodity Futures Trading Commission, over the SEC. 

Some critics see the proposal as too accommodating. 

“It’s bipartisan in the sense that senators from different parties are giving the crypto industry pretty much what it wants,” tweeted Hilary Allen, a professor at American University’s Washington College of Law. 

“It gives most jurisdiction over crypto assets to the CFTC, which has no investor protection mandate and far fewer resources than the SEC,” she added. 

Asian markets drop with traders gripped by recession fear

Asian markets struggled again Friday following another selloff on Wall Street fuelled by recession fears, with warnings of a bleak outlook for the global economy as central banks slam on the brakes to battle soaring inflation.

Data showing US consumers — the backbone of the world’s top economy — were growing increasingly reticent about spending dealt a fresh blow to equities Thursday, with the S&P 500 suffering its worst January-June since 1970.

With the war in Ukraine showing no sign of ending — keeping energy costs elevated — there is an expectation that borrowing costs will continue to rise and send economies into recession.

“If anyone thinks that equities can rally into the back of the year, they are making the assumption that the Fed is going to let go of its entire focus on price stability and step back from that,” Seema Shah, at Principal Global Investors, told Bloomberg Television.

“We have a very different view. We think things are going to get pretty tough.”

After a broad retreat on Thursday in Asia, markets battled to recover but with little conviction.

Tokyo, Shanghai, Seoul, Sydney, Mumbai, Singapore, Jakarta and Wellington all fell, though there were small gains in Bangkok.

Taipei shed more than three percent to fall into a bear market — a 20 percent drop from its recent peak.

Hong Kong was closed for a holiday.

London, Paris and Frankfurt extended losses at the open.

Losses across world markets this week come after a rally last week fuelled by hopes that an economic slowdown or signs of recession would lead central banks to ease off their monetary tightening drive.

But comments from top finance chiefs, including Federal Reserve boss Jerome Powell, suggest they are willing to endure the pain of a contraction as long as they can rein in prices — which are rising at their fastest pace in 40 years.

“With central banks shifting towards accepting that monetary tightening is impossible without some economic damage, the market narrative has swung 180 degrees this week,” said SPI Asset Management’s Stephen Innes.

He added that sharp rate hikes by the Fed and other central banks were being front-loaded in the hope inflation will ease earlier and allow them to cut borrowing costs more quickly.

“The hope is that by the November midterm elections, when the economy has chilled enough, it will be possible to pause or at least significantly slow further hikes to allow investors to enjoy a Santa Claus rally; otherwise, it could be a winter of discontent,” Innes said.

But markets strategist Louis Navellier suggested that the economy was not in as bad a shape as feared.

“The amazing thing is that we are not in an ‘earnings recession’ and the analyst community remains largely positive,” he said in a note.

“Frankly, the analyst community is smarter than the macro strategists that keep calling for a recession. The bottom line is fear sells, so negative news continues to overpower positive analyst comments.”

Oil prices fell, putting the commodity on course for a third successive week of losses owing to concerns that a recession will hit demand.

That has overshadowed a tight market caused by sanctions on Russia over its Ukraine invasion and an expected jump in demand from China as it emerges from its Covid lockdowns.

Innes added: “With energy bulls having a good run this year, investors seem more inclined to take money off the table in the face of growing uncertainty as the energy crisis moves onto the global recession phase.

“As the adage goes, the best cure for high prices is high prices.”

The grim economic outlook also weighed on Bitcoin, which was struggling below $20,000, having fallen as low as $18,632 earlier.

– Key figures at around 0720 GMT –

Tokyo – Nikkei 225: DOWN 1.7 percent at 25,935.62 (close)

Shanghai – Composite: DOWN 0.3 percent at 3,387.64 (close)

London – FTSE 100: DOWN 0.8 percent at 7,112.31

Hong Kong – Hang Seng Index: Closed for a holiday

West Texas Intermediate: DOWN 0.6 percent at $105.16 per barrel

Brent North Sea crude: DOWN 0.4 percent at $108.59 per barrel

Dollar/yen: DOWN at 134.85 yen from 135.75 yen Thursday

Euro/dollar: DOWN at $1.0453 from $1.0487 

Pound/dollar: DOWN at $1.2115 from $1.2177

Euro/pound: UP at 86.25 pence from 86.08 pence

New York – Dow: DOWN 0.8 percent at 30,775.43 (close)

Taliban's reclusive supreme leader attends Afghan clerics' meeting

The Taliban’s reclusive supreme leader Hibatullah Akhundzada showed up Friday at a major gathering of clerics in the Afghan capital called to rubber-stamp the hardline Islamist group’s rule over the country.

Akhundzada, who has not been filmed or photographed in public since the Taliban returned to power in August, would address the gathering later, government spokesman Bilal Karimi tweeted.

His arrival, broadcast on state radio, was greeted with cheers and chants including “Long live the Islamic Emirate of Afghanistan”, the Taliban’s name for the country.

Over 3,000 clerics and elders have gathered in Kabul since Thursday for the three-day meeting, and Akhundzada’s appearance had been rumoured for days — although media are barred from covering the event.

He rarely leaves Kandahar, the Taliban’s birthplace and spiritual heartland, and apart from one undated photograph and several audio recordings of speeches, has almost no digital footprint.

But analysts say Akhundzada, believed to be in his 70s, has an iron grip on the movement and bears the title “Commander of the Faithful”. 

Akhundzada’s appearance comes a week after a powerful earthquake struck the east of the country, killing over 1,000 people and leaving tens of thousands homeless.

No women are attending the clerics meeting, but a Taliban source told AFP this week thorny issues such as girls’ education — which has divided opinion in the movement — would be discussed.

Since the Taliban’s return, secondary school girls have been barred from education and women dismissed from government jobs, forbidden from travelling alone, and ordered to dress in clothing that covers everything but their faces.

They have also outlawed playing non-religious music, banned the portrayal of human figures in advertising, ordered TV channels to stop showing movies and soap operas featuring uncovered women, and told men they should dress in traditional garb and grow their beards.

– Heightened security –

The Taliban have thrown a dense security blanket over the capital for the meeting, but on Thursday two gunmen were shot dead near the venue.

Officials said the two started firing from a rooftop but were “quickly eliminated by Mujahideen with the help of Allah the Almighty”.

Officials have provided scant details of the three-day men-only “jirga” — a traditional gathering of clerics and influential people that settles differences by consensus.

But most speeches so far have focused on loyalty to the Taliban regime, and strict punishment for those who oppose it.

“Obedience is the most important principle of the system,” Habibullah Haqqani, the head of the gathering, said in his opening remarks.

“We must obey all our leaders in all affairs, sincerely and truly.”

One leading cleric said Thursday that anyone attempting to topple the Taliban regime should be beheaded.

“This (Taliban) flag has not been raised easily, and it will not be lowered easily,” Mujib ur Rahman Ansari, the imam of Gazargah Mosque in Herat, told the gathering.

“All religious scholars from across Afghanistan should come to this conclusion… whoever commits the smallest act against our Islamic government should be beheaded.”

Women’s rights activists have slammed their lack of participation.

“Women should be part of the decisions about their fate,” Razia Barakzai told AFP Thursday.

“Life has been taken away from Afghan women.”

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