A Chinese man in Jiangsu province, known as Mr. Xu, has suffered a significant loss of $10 million after a court ruled that his Bitcoin loan to Mr. Lin is not protected by law. Mr. Xu had lent 341 Bitcoins to Mr. Lin for a peer-to-peer loan, as he lacked fiat funds at the time. However, Mr. Lin defaulted on the loan, prompting Mr. Xu to take legal action. The court dismissed the case, stating that Bitcoin is not considered a legal form of currency and therefore cannot be subject to legal enforcement or used for compensation.
The ruling was supported by Ming Wang, the vice-magistrate of the Changzhou Zhonglou People’s Court, who emphasized that Bitcoin is a digital commodity and doesn’t hold the same legal status as fiat currencies. Wang warned that lenders bear all the risks when lending cryptocurrencies. However, it’s worth noting that in a separate ruling, the Hangzhou Internet Court recognized digital assets like nonfungible tokens as “online virtual property” protected under Chinese law.
Meanwhile, East Asia has seen the disappearance of several Web3 founders, causing concern in the industry. One notable case is the disappearance of Zhaojun He, the co-founder of the Chinese cross-chain bridge Multichain. The protocol had around $1.5 billion locked at the start of July but had to be shut down after Zhaojun’s arrest by Chinese police. As Zhaojun had control of Multichain’s server-based and private keys, the protocol’s funds were inaccessible.
There have been speculations about the involvement of third-party tracking companies supplying leads to the police in exchange for money. These companies allegedly played a role in the arrests of Web3 founders and the freezing of funds. Following Zhaojun’s arrest, assets stored on the Multichain bridge were swapped for stablecoins and transferred out of the protocol. Stablecoin issuers like Circle and Tether froze over $63 million worth of suspicious transactions linked to Multichain.
Similar incidents have occurred, such as the case of Wuwei Liang, brother of CoinXP co-founder Liang Liang. Wuwei claimed that the virtual currency seized from CoinXP by the Wuxi Public Security Bureau was transferred to other wallet addresses, and 20 Bitcoins went missing in the process. Liang Liang is currently on trial, charged with “illegal solicitation of public funds” and running a “multi-level marketing” scheme.
The crackdown on Web3 founders and blockchain initiatives in China is believed to be linked to the government’s efforts to promote centralized blockchain projects like the digital yuan CBDC. Earlier this year, the offices of CNHC, a Chinese offshore-yuan stablecoin issuer, were raided by police, and its executives were detained.
In another incident, recent rumors emerged that senior executives of cryptocurrency exchange Huobi were arrested by Chinese police. However, Huobi denied these rumors and labeled them as “fake news.” Despite the denial, there are claims that Huobi staff are currently under criminal investigation, and the exchange’s USDT reserves and total assets have declined in recent months. However, Huobi’s de-facto owner, Justin Sun, maintains that the exchange is doing well, stating that it generated over $85 million in Q2 profits.
Overall, these developments in East Asia highlight the challenges and risks associated with cryptocurrencies and blockchain projects in the region. While there are conflicting rulings and uncertainties around the legal status of digital assets, there is also a growing crackdown on Web3 founders and initiatives, potentially driven by the government’s agenda for centralized blockchain projects.