India bolts the door for overseas crypto exchanges
Binance, Huobi and others removed from app stores for operating illegally
It’s been quite a week in Southeast Asia with despair (Lazada layoffs) and hope (a huge new VC fund closing) in equal measures. India, meanwhile, is closing a loophole that let crypto traders bypass stringent tax demands after it clamped down on global trading apps.
This week we also have plenty on Nvidia’s China escapades—a rival just landed big money, all while AI companies are stripping PC gaming processors for parts—and Byju’s, once the world’s highest-valued ed tech company, has had its valuation stripped to a mere $1 billion by one investor.
There’s plenty to get into so without further ado let’s get to it!
News in focus
India clamps down on noncompliant crypto exchanges
India has always maintained a non-committal stance to crypto but it just ratcheted up the pressure after it forced 9 overseas-based trading apps out of Apple’s Apple Store and the Google Play Store for operating “illegally” in the country.
The list included major sites Binance, Kraken, Kucoin, Huobi among others. It’s not exactly clear what is going on, but it is likely related to a new tax for crypto trading from 2022 as this key passage from TechCrunch explains:
Many Indian traders have switched to global cryptocurrency platforms in recent quarters in an apparent move to evade taxes. India began taxing virtual currencies last year, levying a 30% tax on the gains and a 1% deduction on each crypto transaction. India-based crypto exchanges, including a16z-backed CoinSwitch Kuber, B Capital-backed CoinDCX and former Binance partner WazirX, continue to require rigorous know-your-customer verifications before onboarding new users, but the same hasn’t been true of many global platforms.
The result has seen local exchanges suck up the trades, with WazirX and Mudrex apparently taking 70% of new capital flowing in from Binance. (WazirX and Binance had an acrimonious split a few years ago which might make that a little sweeter.)
India is a big market for Web3, as it is for all areas of tech, so expect there to be negotiations for these apps to return. But still, Manish Singh at TecCrunch has asked whether India is done with crypto.
Lazada makes largest layoffs to date—and it didn’t do it well
I don’t know how this missed the previous newsletter but Lazada made layoffs, and they are significant indeed—impacting potentially around 30% of the workforce once fully carried out. There are a few narratives around this sizeable retrenchment so here’s my tl;dr:
It began with around 100 layoffs but is expected to reach 30% of the company, which would be Lazada’s largest retrenchment in its 12 year history. For context, rival Shopee let 7,000 people go over a 7-month period last year.
It wasn’t handled well—first week of the New Year; without warning; some getting invites to layoff calls just hours before. VC Jeremy Tan has a good run down of how poorly it was handled versus Airbnb, which set a gold standard for the unwanted business of letting employees go during Covid.
There’s speculation that this belt tightening might be related to IPO plans. While it is true that parent Alibaba has carved out a number of its business units with a view to taking them public to give them more independence and financial firepower, these unfortunate events read more like belatedly following the competition.
Layoffs are not nice (I’ve experienced this first hand) so good luck to those impacted, my inbox is always open: firstname.lastname@example.org.
Asia Partners closes second fund with impressive $474M
Last year was a tough one for funding in Southeast Asia (and well anywhere) but there are already green shoots within the first two weeks after Asia Partners, the fund co-founded by former Sea exec Nick Nash, closed $474M for its second fund. Its maiden fund raised around $384M so this is a decent upswing considering the challenging market. That’s a huge amount for a relatively new fund.
I’ve not been able to get comment from Nash directly, but a number of other VCs seem to be impressed (and perhaps a little jealous) when asked how tough a feat raising a big round under challenging conditions was. The next challenge, though, will be putting that capital to work in quality deals that can bring about exits. That’s right folks, the big challenge remains exits in Southeast Asia. Raising the money is tough, but then finding deals that actually pay out might just be harder. A vast war chest certainly helps.
HongShan backs Chinese Nvidia rival
A quick one on HongShan, formerly Sequoia China, investing in Iluvatar CoreX, a Shanghai startup that competes with Nvidia in the Chinese market. The valuation is at over $1B and, as this week’s stories will show, it is tapping a very burgeoning need in China.
US artificial intelligence companies OpenAI, Anthropic and Cohere have engaged in secret diplomacy with Chinese AI experts, amid shared concern about how the powerful technology may spread misinformation and threaten social cohesion link
According to multiple people with direct knowledge, two meetings took place in Geneva in July and October last year attended by scientists and policy experts from the American AI groups, alongside representatives of Tsinghua University and other Chinese state-backed institutions.
Attendees said the talks allowed both sides to discuss the risks from the emerging technology and encourage investments in AI safety research. They added that the ultimate goal was to find a scientific path forward to safely develop more sophisticated AI technology.
Shein reportedly filed for an IPO in the US late last year and now it is said to have contacted the Chinese regulator for that planned listing link
The US blockage of processors has forced a number of Chinese AI firms to resort to repurposing PC gaming chips to fill the void—with thousands of Nvidia gaming graphics cards reportedly stripped of their core components in factories and workshops every month link
It isn’t just AI startups: Chinese military bodies, state-run artificial intelligence research institutes and universities have over the past year reportedly purchased small batches of Nvidia semiconductors banned by the U.S. from export to China link
Nvidia is, however, planning to begin mass production of a compliant AI chip for China in Q2 link
Chinese military bodies, state-run artificial intelligence research institutes and universities have over the past year purchased small batches of Nvidia semiconductors banned by the U.S. from export to China link
Meituan, the delivery service heralded as a blueprint for many struggling to be sustainable, has lost an incredible $82B in market cap over the last year—that’s $138B to $56B on account of a slow down with food delivery link
But there are signs of green shoots with Meituan quickly becoming Hong Kong’s second-largest food delivery platform since launching in May 2023, its first launch outside of China link
Microsoft doesn’t know what to do with its China-based AI Lab, first opened in 1998, as it becomes politically tricky to maintain link
On-demand service Dada Nexus, part of the JD family, is investigating “suspicious practices” that include the overstatement of some 1 billion yuan ($140 million) of revenue and costs—its share price crashed 46% in response link
A Chinese state-backed institution has devised a way to identify users who send messages via Apple’s AirDrop, Beijing’s government claims, as part of broader efforts to root out ‘undesirable’ content link [in more detail: Attack of the week: Airdrop tracing]
Huawei has ended its US lobbying operations after years of fighting ban link
BlackRock has cut Byju's valuation by 95% to $1B following a series of scandals and financing issues link
ByteDance is shutting down its music streaming service Resso in India following an order from the government link
A look at how Korean gaming firm Krafton brought Battlegrounds, the localised successor to its smash hit game PUBG, back from a ban link
Bank of America has given Jio Platforms a $100B+ valuation link
India’s ecommerce roll-up companies have paused their flurry of brand buyouts and are now said to be seeking funds for survival—small startups like 10club and Upscalio have pivoted or want to be acquired; bigger fish like Mensa Brands and GlobalBees are focusing on sustainability link
US listed cybersecurity firm SentinelOne acquired startup PingSafe, backed by investors including Peak XV, for a reported price of over $100M link
Quick commerce and food companies such as Swiggy, Zomato, Blinkit and Zepto are using advertising to bump up their overall revenue by around 10-12% link
Indian tech workers who were laid off in the U.S. and returned home say they have taken massive pay cuts and are earning less than their peers in India link
Retail SaaS firm Impact Analytics raises $40M led by Sageview Capital link
Indian data centre operator Yotta will buy $500M in chips from Nvidia, taking its order book with the firm to $1B as part of efforts to grow its AI cloud services link
Vietnam’s Be Group raised $30M to take on Grab in areas from ride-hailing to deliveries link
Singapore-based Tack One launches an improved version of its location tracker for children and seniors link
Upbit Singapore wins full digital asset license from MAS link
BitGo obtains in-principle approval in Singapore for digital asset license link
Rest of Asia
Samsung profit tumbles 35% as chip weakness persists link
SK Hynix's market value could double in 3 years via AI memory chip demand - CEO link
South Korea splashes out on CES's prime startup zone as China lies low link
Myanmar rebels take control of ‘pig butchering’ city Laukkaing, a notorious hub of online scamming operations link
TSMC halts revenue drop, beats expectations on brisk demand for AI chips from Nvidia, Advanced Micro Devices link
Foxconn pushes into electric vehicle production near its biggest iPhone plant amid slow smartphone sales link