Terra creator Do Kwon faces prosecutions in South Korea

Do Kwon, the creator of the stablecoin TerraUSD (UST) and its sister token Luna, is facing legal prosecutions in South Korea over the collapse of the two coins that have wiped billions of dollars off investors around the world earlier this month.

The Seoul Southern District Prosecutors’ Office said Friday that it has kicked off an investigation on Terraform Labs, the organization behind the stablecoin project Terra led by Do Kwon, and assigned the case to its Financial and Securities Crime Joint Investigation Team, a special financial crimes unit brought back recently by the newly appointed justice minister Dong-hoon Han, according to local media.

The announcement came a day after five Korea-based crypto investors with combined damages of 1.4 billion won (about $1.1 million) filed criminal complaints against Kwon and his Terraform co-founder Daniel Shin over charges of fraud and other violations of financial regulations.

South Korea’s financial authorities estimated that about 280,000 users owned a combined amount of 70 billion Luna in Korea.

“The design and issuance of Luna and Terra to attract investors, but the failure to properly inform them about the flaws, and the unlimited expansion of Luna’s issuance amounted to defrauding investors,” said a representative from LKB & Partners, the law firm hired by the five investors bringing charges against Terraform Labs.

Do Kwon is also reportedly facing a tax fine of 100 billion won ($78 million) for evading corporate and income tax payments.

UST, which was once one of the most promising stablecoins, depegged from its $1 value last week and has since dropped to $0.079. Rather than being backed by fiat money or real life assets like some other stablecoins, the value of UST is maintained by “burning” its sister token Luna. The price of Luna has plummeted over 99% since last week.

The Block first reported Terraform Labs’ in-house legal team has resigned in the wake of the UST and Luna collapse.

Terraform Labs is incorporated in Singapore but was registered to operate its business as Terraform Labs Korea in South Korea

Southeast Asian payments infrastructure unicorn Xendit banks $300M

Xendit, a payments infrastructure platform for Southeast Asia, has raised $300 million in fresh funding. The company’s new valuation wasn’t disclosed, but it hit unicorn status in its last round of funding in September 2021. The new round brings its total raised to $538 million and was led by Coatue and Insight Partners, with participation from Accel, Tiger Global, Kleiner Perkins, EV Growth, Amasia, Intudo and Goat Capital.

Part of the funding will be used to expand into new markets, like Thailand, Malaysia and Vietnam. The company, which bills itself as “the Stripe of Southeast Asia,” also plans to add value-added services in addition to payments, like working capital loans. Xendit now has over 3,000 customers, including Samsung Indonesia, GrabPay, Ninja Van Philippines, Qoala, Unicef Indonesia, Cashalo and Shopback.

The company says that over the last year, it grew annualized transactions from 65 million to 200 million and increased total payments value from $6.5 billion to $15 billion. Xendit has made several strategic investments in companies that serve startups and SMEs, including private bank Bank Sahabat Sampoerna in Indonesia and payment gateway Dragonpay in the Philippines.

Xendit was founded in 2015 by chief executive officer Moses Lo and chief operating officer Tessa Wijaya.

For people who aren’t familiar with Southeast Asia’s fragmented payments landscape and the challenges its poses for businesses, Wijaya explained that “while the U.S. builds everything around credit cards, you just cannot do that in Southeast Asia. Credit card penetration is extremely low especially in countries like Indonesia, so we have to help merchants offer alternative payment methods.”

She added that before using Xendit, merchants who wanted to accept and send payments would first need to contact banks and other partners to integrate with them. Many small businesses, however, do not have the time or resources to do that. Xendit solves that problem by aggregating payment options for merchants.

“From the consumer perspective, let’s look at a specific example. In the U.S., if you enjoy ‘Game of Thrones’ like I do, you can pay for a recurring subscription on HBO online by entering your credit card information just once,” Wijaya said. “In Indonesia, if you subscribe to HBO, the experience is extremely high-friction. HBO thought that in markets where cards don’t exist, the way to go was to pay through your telco provider. For me, the consumer, this means I have to go to my telco app, wait 10 seconds for it to load, find HBO amongst many other products, pre-purchase a 30-day plan and repeat every month.”

This friction means lost business for companies. Xendit solves this problem by integrating payment options for merchants.

“Before Xendit entered the scene, payments infrastructure was disjointed and provided no reliable way for SMEs and startups to connect with customers,” said Lo. “Since payments are a foundational part of any business, you can’t create a seamless experience without addressing payment issues first.”

India’s Cars24 cuts 600 jobs

Cars24, a marketplace for used cars, has laid off about 600 people just five months after closing a $400 million financing round, the latest Indian unicorn to cut its workforce as it attempts to steer through the gloomy market conditions.

The Cars24 layoff, which represents about 6% of the startup’s workforce, affects staff across multiple divisions, a person familiar with the matter said.

A spokesperson for Cars24, a “Series G” startup valued at $3.3 billion, insisted in a statement that the move was “business as usual.”

Cars24 has raised over $1 billion in debt and equity financing over the years and counts SoftBank, Alpha Wave Global and DST Global among its backers.

A growing number of startups in India — as is the case elsewhere — are streamlining their teams to improve their financials and increase the runway.

Indian edtech Vedantu has let go over 620 people in recent weeks, whereas its chief rival, Unacademy, has fired about 1,000 individuals. Meesho, OkCredit, Trell, Furlenco and Lido have also cut several roles within their firms in recent weeks.

Investors are advising startups to cut their costs and increase the runway by as much as three years, according to several people familiar with the matter. Plenty of funding rounds that were getting finalized a few weeks ago are increasingly being renegotiated or stalled or canned, according to the people.

Pintarnya is building a super app for Indonesia’s blue collar workers

Indonesia’s 60 million blue collar workers contribute 20% to its gross domestic product, but they face a lot of uncertainty. Many are forced to bounce from job to job, some fall victim to scam job postings and without a steady employment history, are unable to qualify for financial services, say the founders of Pintarnya. That’s why they created the app, which includes verified job postings and financial services, like loans, for blue collar workers. The startup announced today it has raised $6.3 million in seed funding led by Sequoia Capital India and General Catalyst. The funding includes a $100,000 grant from Sequoia Spark, a program for women founders that co-founder Nelly Nurmalasari participated in.

Pintarnya was launched this May in major Indonesian cities by Nurmalasari, Henry Hendrawan and Ghirish Pokardas. Nurmalasari and Hendrawan were formerly senior executives at lifestyle super app unicorn Traveloka, while Pokardas was a KKR executive who worked with portfolio companies in financial services.

In an email, the cofounders told TechCrunch that Nurmalasari also owned a hair salon and as an SME owner, she experienced the pain points of trying to hire, filter and verify applicants for blue collar jobs. She also saw that they struggled to obtain loans from traditional financial institutions because of their lack of verifiable employment and income history.

“The problem became clear when the spillover of her employee’s struggles became hers as these challenges impact employee performance,” they said. “This fortified the vision for a one-stop digital platform that can help in tackling this challenge, to be more employable and access financial services products.”

Pintarnya focuses on the food and beverage, hotel and retail sectors, now reopening after COVID lockdowns, and logistics. It plans to expand into other sectors as well and is open to partnering with employers from other industries.

Job seekers register and create a profile, then Pintarnya uses that information to recommend job openings based on their requirements, location, skills and other data. Key criteria include the distance between a job and their home, their profile and job history and their self-determined capabilities. The team said that as they build a track record of successfully connecting and placing jobseekers with employers, Pintarnya’s recommendation algorithms will become better by “understanding what other jobseeker traits have a higher propensity of converting their application into a successful job placements.” Variables that it takes into consideration include a jobseeker’s current salary and availability, whether or not they have a photo on their CV and the frequency in which they switch jobs.

Pintarnya also works with employers to screen and recruit the most suitable workers for their needs, including online tests. It also verifies job listings’ authenticity to avoid scams and highlights verified job posts using green shield markers. Verification includes checking that a job listing came from a real employer and curating them based on new posts, jobs closest to a jobseeker, jobs for people without experience, salary information and other factors that the platform is experimenting with.

“Technology has transformed the kinds of jobs being created in Indonesia, but the process of hiring, especially in the blue collar segments, continue to be broken,” said Sequoia India managing director Abheek Anand in a statement. “Pintarnya’s founding team brings years of exceptional experience building tech and financial products to solving this problem, and we are thrilled to partner with them in their journey to help millions of Indonesians realize their full economic potential.”


Fintech Slice joins UPI race to challenge PhonePe and Google Pay

Slice is adding the popular railroad UPI on its eponymous app as the Indian fintech looks to broaden its offerings and pushes to become a one-stop payments app for consumers in the world’s second largest internet market.

The Bengaluru-headquartered startup, which became a unicorn late last year, said it is rolling out UPI feature to all its existing users as well over 10 million of those who have been on its waitlist.

Slice offers customers credit card-like features, and through its app gives them access to a range of deals with popular merchants. The UPI feature is the latest addition for the Slice app, which is aiming to drive engagement as it gives users more reasons to interact with the startup’s offerings.

Rajan Bajaj, founder and chief executive of Slice, said in an interview that by leveraging UPI the payments app is opening the app to every smartphone user in the country.

UPI users on Slice will be able to create unique IDs that will allow them to search for their friends by their names instead of their phone numbers, as is popular on other UPI-supported apps. These unique IDs are powered by Andy, a web3 project that Slice has been working on since last year.

“While building our UPI product, we ensured that we removed all the friction — there is no advertisement, there is no cross-selling, and there are no 100+ CTAs. The question we keep asking ourselves is ‘how can the user do this in one second or even less time?’ And we wanted to make this happen, now,” he said.

TechCrunch reported in late March that Slice was working on launching support for UPI and was revamping the app.

With UPI support, Slice is entering a crowded market. Google’s Gpay and Flipkart-backed PhonePe currently lead the UPI chart with over 80% of the market share. Scores of other players including Paytm and Tata Neu also offer support for UPI payments.

UPI, a five-year-old payments protocol built by a coalition of retail banks, is the most popular way Indians transact money online. In the month of April, the UPI network processed over 5.5 billion transactions, up from 7.2 million during the same period four years ago.

The payments network, which is supported by over 300 banks, allows users on one app to send money to any other user on any other UPI app.

“The payments network in India is very open with interoperability,” said Bajaj. “I believe that a product with the best consumer experience will eventually win people’s hearts. The significant growth which we have seen in the last few years on our slice super card proves that we have really struck a chord culturally with our consumers and they would love to use us for all their payment needs.”

Slice, which is backed by Insight Partners and Tiger Global, said it aims to turn its credit business profitable in the coming months. “As Slice turns profitable in the core product, the company will increasingly be using the free cash flows from there to increase the scope of what Slice stands for its consumers,” it said.

India pushes ahead with its strict VPN and breach disclosure rules despite concerns

India is pushing ahead with its new cybersecurity rules that will require cloud service providers and VPN operators to maintain names of their customers and their IP addresses despite many players threatening to leave the world’s second largest internet market over the new guidelines.

The Indian Computer Emergency Response Team clarified (PDF) on Wednesday that “virtual private server (VPS) providers, cloud service providers, VPN service providers, virtual asset service providers, virtual asset exchange providers, custodian wallet providers and government organisations” shall follow the directive, called Cyber Security Directions, that requires them to store customers’ names, email addresses, IP addresses, know your customer records, financial transactions for a period of five years.

The new rules, which were unveiled late last month, won’t be applicable to corporate and enterprise VPNs, the government agency clarified.

New Delhi is also not relaxing a new rule that will mandates firms to report incidents of security incidents and data breaches within six hours of noticing such cases.

Rajeev Chandrasekhar, the junior IT minister of India, told reporters on Wednesday that India was being “very generous” in giving firms six hours of time to report security incidents, pointing to nations such as Indonesia and Singapore that have stricter requirements.

“If you look at precedence all around the world — and understand that cybersecurity is a very complex issue, where situational awareness of multiple incidents allow us to understand the larger force behind it — reporting accurately, on time, and mandatorily is an absolute essential part of the ability of CERT and the government to ensure that the internet is always safe,” he said.

Several VPN providers have expressed worries about India’s new cybersecurity rules. NordVPN, one of the most popular VPN operators, said earlier that it may remove its services from India if “no other options are left.”

Other service providers, including ExpressVPN and ProtonVPN, have also shared their concerns.

On the other hand, many have welcomed some changes. “There has been a lot of pressure on CERT-In with large scale data breaches being reported across India. Most of the breaches were denied by the companies and despite its mandate, CERT-In never acted on these reports,” said Srinivas Kodali, a researcher.

This is a developing story. More to follow…

Amazon launches Smart Commerce in India to help offline stores launch digital storefronts

Amazon said it will help neighborhood stores across India launch their own digital storefronts to better serve their customers, the latest effort by the e-commerce giant as it attempts to leverage the dense network of offline stores in the key overseas market.

Amazon on Wednesday launched Smart Commerce, a new offering that will allow stores to create their own online storefronts and also offer in-store shopping experience to their walk-in customers.

The new offering is built atop Smart Stores, another program the US giant had launched two years ago to help neighborhood outlets serve their walk-in customers. Two years ago, it also launched Local Shops, a program that allows offline stores to sell directly on Amazon. Amazon said stores of any size can sign up for Smart Commerce and the company will provide them assistance with logistics and digital payments.

“We are humbled by how neighborhood stores from across India are taking advantage of our Local Shops on Amazon program to go online and grow their business, with over 1.5 lakh stores already selling on Amazon.in within two years of launch,” said Amit Agarwal, SVP of India and Emerging Markets at Amazon, at a virtual event.

“Today, we are excited to launch Smart Commerce that will enable any store to truly become a digital dukaan, and serve customers with the best of Amazon no matter where they are.”

Smart Commerce will offer a range of features to stores including the ability to digitize billing, manage inventory, as well as a voice and chat-based shopping experience, the firm said. It will start to roll out some of these features in the coming weeks.

Amazon, which has invested over $6.5 billion in its India operations, said over 125,000 neighborhood stores are already selling online using its marketplace.

Amazon, and its chief rival in India, Flipkart, have scrambled to explore ways to work with neighborhood stores across the country in recent years. These mom-and-pop stores offer all kinds of items, are family-run and pay low wages and little to no rent. Because they are ubiquitous — there are more than 30 million neighborhood stores in India, according to industry estimates — no retail giant can offer a faster delivery. And on top of that, their economics are often better than most of their digital counterparts.

Meta is also keeping an eye on this segment. It has partnered with Reliance Retail, India’s largest retail chain, which is bringing several of its commerce offerings to WhatsApp. Google, too, has invested in a startup that is helping stores across the nation serve customers online.

CyberConnect raises $15M Series A to put data back in the hands of users

One of the promises made by web3 entrepreneurs is putting data back in the hands of owners through decentralization. Singapore-based CyberConnect is among a handful of blockchain startups working to fulfill this vision, and it has recently closed a Series A financing round totaling $15 million.

The lead co-investor of the round is Animoca Brands, the Hong Kong-based company that has in recent years risen from an underdog in game development to an investment juggernaut in the web3 world. The other co-investor is Sky9 Capital, a Shanghai-based venture capital firm founded by Ron Cao, who is known for helping Lightspeed Venture Partners set up shop in China back in the day.

“In web2, companies with the largest social network own users’ social graphs and build walls around them to stem competition and advance corporate interests,” says CyberConnect CEO and cofounder Wilson Wei.

As such, Wei and his team are building a social graph “protocol”, the underlying rules that allow data to be shared between computers, for applications, and in web3’s case, without a centralized agent like Facebook. The end goal is that users can travel across web3 platforms with their followings and followers.

An app experience powered by CyberConnect will look like this: Users connect their crypto wallet — which has become a universal gateway to any web3 app — to a social platform, upon which they will be shown all their existing connections. They will get recommended user addresses to follow, which is based on CyberConnect’s indexing. Once they follow someone, that piece of information will be added to CyberConnect’s network and become “portable and self-sovereign.”

To date, CyberConnect has supported 23 projects including Project Galaxy and Mask Network, reaching a total of 710,000 users.

Other companies are building similar infrastructure to allow follower interropability, such as Lens, which is operated by Aave, a decentralized lending protocol backed by Blockchain Capital.

CyberConnect’s solution, Wei tells TechCrunch, consists of two components. Similar to Lens, it offers a software development kit (SDK), a piece of software for developers to create custom apps that let end-users manage their social graphs and a “social data network” that aggregates users’ behavior in web3, such as what tokens and NFTs they bought.

Rather than using smart contracts like Lens, CyberConnect’s SDK is built on top of InterPlanetary File System (IPFS), a peer to peer data storing and sharing network, and Ceramic, a network that manages mutable data without centralized servers, which Wei claims is a more “economic and gas-efficient solution.” Smart contracts are computer programs that execute automatically according to the terms of contracts and incur “gas fees”, the payments made by users to compensate for the computing power required to process transactions.

“Smart contract-based protocols are creating value from scarce items while any data stored on-chain costs a nontrivial amount of gas fee. There are only 10,000 NFTs in one collection and a limited amount of bitcoins,” Wei explains.

“In contrast, social context welcomes data abundance. There’s only an ever-increasing number of new users, new connections, and new content and that data will be by nature dynamic and need constant updates.”

CyberConnect plans to generate revenues through the social data network, which include different participatns like data contributors, indexers and recommenders, curators, and users. The network will be permissionless, meaning anyone can join, and include incentive mechanisms revolving around query fees, according to Wei.

The startup, headquartered in Palo Alto, operates with a team of 27 across the US, China, Canada and Europe.

Several venture investment firms, including Dragonfly, have recently warned web3 startups to brace for a cooling industry in the wake of the recent crypto market crash and wider macroeconomic compliactions. Wei is undeterred, saying “bear markets are a great time for us to focus on building.”

“As a serial entrepreneurial team, with more than seven years in social, Web3, and blockchain, previous experiences taught us that it is crucial to keep building during the downturns,” he says. “It will also be easier for truly visionary and value-creating projects to be properly recognized as the noise will die down together with the market hype.”

ZMO.ai secures $8M led by Hillhouse to create AI generated fashion models

With breakthroughs in machine learning, it’s no longer uncommon to see algorithmically generated bodies that can move and talk authentically like real humans. The question is now down to whether startups offering such products can achieve a sustainable business model. Some of them have demonstrated that potential and attracted investors.

ZMO.ai, founded by a team of Chinese entrepreneurs who have spent years studying and working abroad, just closed an $8 million Series A financing round led by Hillhouse Capital. GGV Capital and GSR Ventures also participated in the round.

The startup has found a healthy demand from fashion e-commerce companies that are struggling to hire and afford models due to their growing number of stock-keeping units (SKUs), or styles, as consumer tastes become more changeable. Using the generative adversarial network (GAN), ZMO has created a piece of software to help them create virtual full bodies of models by defining simple parameters like face, height, skin color, body shape, and pose.

“Traditionally, the entire cycle of garment manufacturing may take two to three months, from design, fabric selection, pattern making, modeling, to actually hitting the shelves,” says Ella Zhang, ZMO’s CEO and co-founder, a former engineer at Google and Apple.

“We are flipping and shortening that process. [Customers] can now test a piece of clothing by putting it on a virtual model, which can go on the website. Once orders come in, the e-commerce customer can start manufacturing,” she tells TechCrunch. “They can also test what type of people would suit a certain product by trying it out on different virtual models.”

It’s unsurprising that fashion e-commerce operators would find ZMO and its likes a cost-saving tool. Zhang says her company is in early discussion with fast fashion giant Shein, which rolls out 2,000-3,000 new products per day, about potential collaborations.

Screen capture of ZMO’s AI-generated video

We previously covered Surreal, a Sequoia-backed, Shenzhen-based startup also working on synthetic media to replace humans in lifestyle photos and other commercial scenarios. The business attracted a surge in interest as the COVID-19 pandemic hit China’s e-commerce exporters, who were having a hard time finding foreign models as the country went into strict border controls.

Going forward, ZMO is also planning to apply GPT-3, which uses big data and deep learning to imitate the natural language patterns of humans, to create speeches for models. As spooky as it may sound, the feature would make it breezy for e-commerce companies to churn out TikTok videos quickly and cheaply for product promotion.

On average, e-commerce companies spend around 3-5% of their annual gross merchandise value (a rough metric measuring sales, usually excluding returns and refunds) on photoshoots, according to Roger Yin, who worked at Evernote and ran his own cross-border e-commerce business before co-founding ZMO with Zhang.

“Images play a big role in driving e-commerce sales. The problem is that the [sales] cycle is short but the cost of images is high,” Yin observes, adding that costs can be even higher for fashion companies with a quick turnover of styles. The goal of ZMO is to reduce the costs of photoshoots to 1% of GMV.

Right now, 80% of ZMO’s customers are based in China, but it’s working to attract more overseas users this year using its new financial infusion. Operating with a team of 30 staff, the startup boasts 30 “medium and large-sized” customers, including Tencent-backed Chicv, one of Shein’s numerous challengers, and over 100 “small and medium” customers, such as dropshipping sellers.

ZMO’s other co-founders include Ma Liqian, a Ph.D. in computer vision who graduated from Belgium’s KU Leuven, and Yang Han, who previously worked on AI-powered styling at Tencent and SenseTime.

Jungle Ventures closes a $600M fund, bringing its total assets under management to over $1B

Singapore-based venture firm Jungle Ventures is digging deeper into Southeast Asia and India with the close of its fourth fund. Fund IV totals $600 million, with $450 million for new investments and $150 million earmarked for follow-up investments in its portfolio companies. The fund’s close brings Jungle Ventures’ total assets under management to over $1 billion, which it says makes it the first independent, Singapore-headquartered venture firm that invests across Southeast Asia and India to hit this milestone. 

Fund IV’s limited partners are split equally between returning investors and new ones. Returning backers include Temasek, IFC, FMO and DEG, while new LPs include StepStone Group. TechCrunch covered the fund’s first close of $225 million in September 2021.

Jungle Ventures was founded in 2012 by Amit Anand and Anurag Srivastava, launching with a $10 million debut fund. Jungle Ventures has about 60 portfolio companies and says its enterprise value is over $12 billion on $250 million of invested capital, with a loss ratio of less than 5%. 

Some of Jungle Ventures’ most notable investments include unicorns Kredivo, Livspace and Moglix. It looks for companies that can expand between Southeast Asia and India; for example, Livspace was founded in India and now operates in Southeast Asia, too. 

Fund IV will continue Jungle Ventures’ “concentrated portfolio” approach, making a projected 15 to 18 key investments out of India and Southeast Asia. It makes many follow-up investments and has invested about $30 million to $40 million in some companies, across multiple rounds. 

“We’ve been investing with that philosophy since our inception in 2012. It’s driven by two major factors that influenced our thinking. Factor number one is that most founders in this region, are first-time founders, and you need a lot of help and support to give to these founders to help them grow their business, help them grow as a leader as well,” Anand told TechCrunch. “From a founder to becoming a CEO is a very long journey, a very painful journey, and not many people become successful CEOs.” 

He added, “This region has been completely under-penetrated in every sector and we would rather focus our time and energy and our capital on fewer investments an make them larger.” 

Fund IV has already backed Vietnamese digital bank Timo; Singapore back office operating system Sleek; Indian D2C consumer electronics brand Atomberg; Web3.0-based social-crypo-community platform for women Eveworld; and inFeedo, an employee retention SaaS platform. 

“If I take a step back and just think of one singular overarching thesis, I would say we are now very, very inspired by the whole decentralization and equitable internet movement that’s happening around the world, whether it’s concepts like Web 3, whether its concepts like even social commerce, whether it’s the SME technology digitalization,” Anand said. “Essentially, bringing the power of the internet to that smallest participant in the internet economy is what’s the most exciting aspect of this fund.”