Our weekly news roundup from East Asia brings you the latest developments in the industry. In a recent case, a Chinese individual named Mr. Chen was sentenced to nine months in prison for assisting his friend, Mr. Lin, in purchasing 94,988 Chinese yuan ($13,104) worth of Tether (USDT) and earning a commission of 147.1 yuan ($20.24). The authorities considered this act to be money laundering due to Mr. Chen sharing his personal bank information for the transaction.
According to Chinese authorities, the crackdown on crypto is attributed to data theft and the use of crypto for money laundering. However, sources suggest that the real reason behind the strict measures is China’s capital control rules. Chinese nationals are prohibited from buying more than $50,000 worth of foreign currencies annually without a permit from the state. The same restrictions apply to large-sum Chinese yuan transactions with foreign banks. The advent of cryptocurrencies has made it easier for individuals to bypass these capital controls, which has raised concerns among senior government officials amid a looming recession.
In a separate case, Jingmen municipal police discovered an online poker platform operating in the city, which had laundered over 400 billion Chinese yuan ($54.93 billion) worth of gambling funds using cryptocurrencies. In China, both online gambling and transferring currencies abroad without proper permits are considered illicit activities. As a result, authorities are now auditing fiat-to-crypto transactions dating back to 2021. Additionally, crypto projects and their Chinese founders are disappearing at an alarming rate. For instance, CNHC, a Chinese offshore yuan stablecoin issuer, saw its employees detained by police following an office raid, and they have not been heard from since.
Chinese authorities have shown a fondness for blockchain technology, especially when they have control over it. In an effort to revitalize China’s economy through increased consumer spending, the government has made the adoption of the Chinese yuan central bank digital currency (CBDC) a political priority. Several cities, including Suqian, Hangzhou, Shaoxing, Jianyang, and Ningbo, have recently conducted airdrops of digital yuan vouchers to residents, leading to real-world results in boosting the economy.
In a surprising move, China decided to stop reporting its youth unemployment figures after reaching a record 21.3% in June. This raises speculation about potential measures the government might take to address the issue, including the possibility of increased blockchain-related initiatives.
In a separate legal matter, creditors of Three Arrows Capital (3AC), a Singaporean hedge fund, faced a setback when United States Bankruptcy Judge Martin Glenn ruled that civil contempt rulings against 3AC co-founder Kyle Davies were invalid. The jurisdictions in which the creditors filed their claims were found to have no jurisdiction over the debtors. This revelation came after creditors had already spent millions in legal fees, with some estimates reaching as high as $30 million.
Furthermore, a Singaporean court ruled that Singapore would be the appropriate forum for hearing the creditors’ $140 million dispute with DeFiance Capital, rather than the British Virgin Islands as suggested by the creditors’ law firm. The disputed funds held with DeFiance Capital are claimed by 3AC creditors as belonging to 3AC’s estate, while DeFiance Capital argues that the assets belong to its independent investors.
As the battle between creditors and the founders of 3AC continues, the co-founders received a reminder from Dubai regulators that their new OPNX exchange for trading crypto bankruptcy claims remains unregistered in the emirate, facing a potential penalty of 10 million Dirham ($2.72 million) for operating without a proper license. The co-founders also have assets in the UAE that could be vulnerable to seizure, so the outcome of the ongoing legal proceedings remains uncertain.
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