Bitcoin miner gets life in prison, China offers bounties for crypto firms … – Cointelegraph


Our weekly roundup of news from East Asia curates the industry’s most important developments.
Crypto exchange HashKey, the first licensed virtual asset provider in Hong Kong, will open its doors to residents for retail trading on Aug. 28.
According to local news reports, investors will only be allowed to invest up to 30% of their net worth into cryptocurrencies when using the platform. A risk control warning will be displayed if the limit is exceeded. However, Xiaoqi Weng, chief operating officer of HashKey, mentioned that the exchange “cannot validate users’ net worth,” and the limit is largely based on “self-verification” of assets.
Weng also disclosed that the exchange will assess users’ investment background based on information submitted during Know Your Customer verification. “Beginners are limited in what they can purchase,” said Weng.
At its debut, users can only trade Bitcoin (BTC) and Ether (ETH) on HashKey Hong Kong. The Hong Kong Securities and Futures Commission has not yet allowed the margin trading of crypto products or crypto derivatives on regulated exchanges, Weng noted.
It appears China no longer wants any private blockchain firms operating within its borders and is on the warpath to get rid of them, no matter the consequences. The move comes amid an increase in using crypto as a means of capital flight in an economic downturn.
Local media reports suggest that, legitimate or not, blockchain projects in China have literal bounties on their heads. First, third-party tracking firms tip off the police on undercover crypto projects in the country; if the report leads to arrest and asset forfeiture, the tracking firm stands to make millions of dollars in commission — if not hundreds of millions of dollars for large-scale projects such as Multichain.
Then, after arrest, crypto executives are reportedly intimidated into handing over the project’s private keys and access to servers. Police then allegedly get third-party payment processors to “dump” the coins and tokens over-the-counter in exchange for Chinese yuan.
Crypto executives are then charged with operating a “multilevel marketing scheme,” “pyramid scheme,” or “money laundering.” If convicted, the charges result in the seizure of all protocol-related assets by the state.
Sources claim that a portion of the funds goes into law enforcement agency revenue. Zhengyao Liu, a senior lawyer at the Shanghai Mankuen Law Firm, wrote: 
“In fact, in the past two years, the profit-seeking law enforcement in crypto-related criminal cases, especially in crypto-related MLM cases, has been the main reason people do not trust the case-handling agencies. For example, the ‘contribution’ of crypto-related criminal cases to financial fines and confiscation revenues is more than 50% higher than in previous years in the Jiangsu Province.”
The crackdown has led to the termination of several protocols this year, with little recourse for non-Chinese users with funds stuck on these platforms. Unsurprisingly, it has sparked a wave of emigration among Chinese Web3 founders and overseas law enforcement efforts to try and recover the “stuck” funds.
Despite the draconian crackdown on private crypto activities, government-led blockchain efforts in China are doing quite well
On August 18, the first digital yuan central bank digital currency green bond was issued with a principal amount of 100 million Chinese yuan ($14 million), a term of two years, and a coupon rate of 2.6% per annum.
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Facilitated by the Bank of Ningbo, the loans will be used to finance a 1.4 gigawatt and a 1.0 GW solar panel facility expansion project in Wuxi.
The digital yuan CBDC has been repeatedly “shilled” for much of this year as a means of stimulating domestic spending amid a financial crisis within the country. In the city of Tianjin alone, digital yuan transaction volumes have surpassed $17.5 billion in the first half of 2023, with over 302,000 merchants accepting the CBDC as a means of payment.
On Aug. 22, the U.S. Federal Bureau of Investigation announced the identification of 1,580 BTC ($41 million) stolen from various projects by North Korean hackers. The six displayed wallets include funds stolen from the $60 million Alphapo hack in June, $37 million stolen from CoinsPaid in June, and $100 million stolen from Atomic Wallet in June. The FBI wrote:
“Private sector entities should examine the blockchain data associated with these addresses and be vigilant in guarding against transactions directly with, or derived from, the addresses. The FBI will continue to expose and combat the DPRK’s use of illicit activities — including cybercrime and virtual currency theft — to generate revenue for the regime.”
The agency said it believes North Korea will attempt to cash out the stolen funds. Criminal investigations into North Korean hackers’ role in the Harmony’s Horizon Bridge and Sky Mavis’ Ronin Bridge exploits last year are still ongoing.
Yi Xiao, a former vice chairman of the Jiangxi Provincial Political Consultative Conference Party Group, has reportedly been sentenced to life in prison by the Hangzhou Intermediate People’s Court for unrelated charges of corruption and abuse of power in a Bitcoin mining enterprise.
According to local news reports on August 22, Yi Xiao operated a 2.4 billion Chinese yuan ($329 million) Bitcoin mining enterprise under the corporate name Jiumu Group Genesis Technology from 2017 to 2021. Despite knowing about a ban on cryptocurrencies, Xiao amassed over 160,000 Bitcoin miners with other corporate executives and, at one time, 10% of the city of Fuzhou’s entire electricity consumption.
Xiao was convicted of using his public office to secure preferential subsidies, capital, and electricity supply for the Jiamu Group. The former official also used his position to fabricate statistical reports to conceal the operations’ true nature.
Starting this year, China has been cracking down harshly on crypto activities amid a spree of data theft and money laundering incidences involving digital assets. Earlier this month, a Chinese national was sentenced to nine months in prison for purchasing $13,067 worth of Tether (USDT) for an acquaintance.

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