Our weekly roundup of East Asian news highlights the most important developments in the industry.

On August 11, a Chinese named Mr. Chen was arrested Sentenced He was sentenced to nine months in prison after helping his friend Mr. Lin buy Tether (USDT) worth 94,988 yuan ($13,104) and earning 147.1 yuan ($20.24) in commission.

Because Mr. Chen shared his personal banking information in the peer-to-peer fiat-to-cryptocurrency transaction, Chinese authorities deemed the act constituted money laundering and imposed heavy sentences.

Chinese Judge Explains Why Bitcoin Lending Contract Is Invalid And So Denies Remedies For Breach.
A Chinese judge explained in a previous case why a bitcoin lending agreement is legally invalid even in the event of a breach. (Jiangsu Satellite TV)

Chinese authorities have officially attributed the crackdown on cryptocurrencies to massive data theft and the use of cryptocurrencies to launder criminal proceeds. However, sources told Cointelegraph that the crackdown has more to do with the country’s strict capital control regulations, which prohibit Chinese citizens from buying more than $50,000 worth of foreign currency per year without state permission. The same goes for large yuan transactions with foreign banks.

Sources say that capital controls were almost done before the advent of cryptocurrencies. A looming recession in China has further exacerbated the problem, making senior government officials wary of more money leaving the country.

In July, Jingmen police inclined Information about online poker platforms operating in the city. Police raids on the office found that the group used cryptocurrencies to “launder” more than 400 billion yuan ($54.93 billion) worth of gambling funds involving more than 50,000 people.

However, the underlying criminality leading to “black money” is never mentioned. Unlike other jurisdictions, the act of gambling itself, as well as transferring money abroad without an applicable license, is considered an illegal activity. According to user reports, fiat-to-cryptocurrency transactions dating back as far as 2021 are currently being audited by a “special police task force.”

Cryptocurrency projects and their Chinese founders have also disappeared at an alarming rate. In addition to the well-known multi-chain incident, in May, employees of Chinese offshore yuan stablecoin issuer CNHC were detained by police after an office raid. There has been no news from them since. Commenting on the story, Wuwei Liang, a former employee of defunct cryptocurrency exchange CoinXP, said: claim:

“Suddenly, with no complainant and no victim, the Wuxi police who came to Beijing from across the province took away all the members of China’s domestic blockchain startup team, the CoinXP team.”

Liang further claimed that the Chinese police would use “intimidation” tactics to extract confessions and hand over the project’s private keys. Using this as “evidence,” the police then charged the co-founders with “fraud and multi-level marketing,” a sham trial in which the defendants were convicted, and led to the seizure of business and user funds. (The allegations have not been proven in court.) We reported earlier on allegations of intimidation, detention and even “kidnapping” of defense attorneys in the ongoing CoinXP trial.

CBDC printers brrrrrr

Don’t get the Chinese government wrong, though; they’re very fond of blockchain, as long as they’re in charge.

To revive China’s struggling economy through consumer spending, government officials have recognized the role of the yuan’s central bank digital currency and made it a political priority. On July 27, the city of Suqian airdropped 20 million ($2.75 million) digital renminbi shopping coupons to residents.

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Subsequently, the city of Hangzhou airdropped 10 million ($1.37 million) digital renminbi food coupons, Shaoxing city airdropped 40 million ($5.49 million) digital renminbi, and Shaoxing city airdropped 30 million ($4.12 million) digital renminbi. The city of Jianyang airdropped 3 million ($412,000) of digital yuan, all in less than two weeks. At a test site in Chengdu, Meituan-Dianping, China’s largest food delivery platform, said the number of digital yuan transactions on its platform had increased by 65.5% daily.

So there are sure to be some real-world gains to help revive the economy — which is desperately needed right now. On August 15, China announced that it would stop reporting youth unemployment data after the youth unemployment rate hit a record 21.3% in June. Maybe we can expect (blockchain) printers to get better in the coming months?

Chinese President Xi Jinping during the Shanghai Cooperation Summit (CCTV)
Chinese President Xi Jinping explained at the Shanghai Cooperation Summit why “friendly countries” such as Belarus and Iran should develop their own CBDCs. (CCTV)

3AC creditors fiasco

Litigation can be tricky, especially when it comes to issues such as the liquidation of a $3.5 billion Singapore-based hedge fund through multi-jurisdictional litigation. This is why attorneys involved in such litigation generally require a high level of competence.

Creditors of Three Arrows Capital (3AC) thus suffered a major setback on Aug. 11, when U.S. Bankruptcy Judge Martin Glenn said the lawsuit against 3AC co-founder Kyle Davies Civil contempt of court award void.

Judge Glenn explained that the law firm Teneo began issuing subpoenas to Davis via Twitter in December on behalf of creditors, citing Davis’ U.S. citizenship. However, it emerged earlier this month that Davis renounced his U.S. citizenship a few years ago to obtain Singaporean citizenship.

“Because Mr. Davis’ U.S. citizenship is a prerequisite for effective service on him, the summons issued by this court has not been properly served.”

As a result, the US courts were unable to exercise jurisdiction over Davis, and Judge Glenn recommended that the creditors’ lawyers file a motion with the Singapore courts to force Davis to comply. It has been more than a year since 3AC filed for bankruptcy.

That is to say, one year later, the creditor discovered that the jurisdiction in which it applied for the claim did not have jurisdiction over the debtor. By the way, 3AC co-founder Zhu Su also holds Singapore citizenship and therefore cannot be compelled by US courts in this matter.

In a post to fans, Suju asked viewers good morning and asked "Only good vibes." (Twitter)
3AC co-founders Kyle Davis (left) and Su Zhu (right). (X/Twitter)

Don’t get me wrong, everyone makes mistakes, but often trivial mistakes have trivial consequences. Unfortunately, that’s not the case here. Since the proceedings began, 3AC creditors have reportedly spent millions of dollars in legal fees, some estimating as much as $30 million.To date, the proceedings have recovered several non-fungible tokens (NFTs) owned by 3AC that sold for $100,000 in two auctions at Sotheby’s. combined … $13.4 million.

In another setback, Singapore court rule On Aug. 15, the city-state will be a convenient forum to hear the $140 million dispute between 3AC creditors and DeFiance Capital, rather than the British Virgin Islands, as Tenio suggested. 3AC creditors claim that the funds held by DeFinance Capital are the property of 3AC, while DeFinance Capital says its assets belong to its independent investors.Su Zhu Comments on Double Strike wrote:

“As the current agent liquidator of 3AC, we believe that Teneo has repeatedly gone too far in trying to seize other investors’ funds. Even from a technical and legal point of view, DC (DeFiance Capital) and SNC assets should belong to 3AC’s feeder funds.”

But on the whole, winning battles is easy; winning wars is hard. On Aug. 16, Dubai regulators reminded Davies and Zhu that their new OPNX exchange, which they use to trade cryptocurrency bankruptcy claims, is still not registered in the emirate and, accordingly, faces Dh10 million for operating without proper licenses ($2.72 million) fine.

Unlike in the U.S., Davis and Zhu actually have assets that are prone to forfeiture in the UAE, including Davis’ prized chicken restaurant. Whether the co-founders can actually shield their assets from angry creditors (and regulators) remains to be seen.

Just before we published Asia Express, 3AC Liquidators submit Singapore court’s detention order for Zhu Su.

Zhiyuan Sun

Zhiyuan Sun is a reporter for Cointelegraph, focusing on technology-related news. He has years of experience writing for major financial publications including The Motley Fool, Nasdaq.com, and Seeking Alpha.


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