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Our weekly roundup of news from East Asia curates the industry’s most important developments.

Chinese man’s $10M loss as court says Bitcoin lending not protected by law

A man in China’s Jiangsu province, identified as Mr. Xu, appears to be out of luck after a court ruled that his 341 Bitcoin loan ($9.9 million) to counterparty Mr. Lin is not protected by law according to local news reports on August 3.

Some time ago, Mr. Xu lent 341 Bitcoins to Mr. Lin after the latter approached him for a peer-to-peer loan. At the time, Mr. Xu lacked fiat funds, and so the parties settled on using Bitcoin for the borrowing through a written agreement. Shortly afterward, however, Mr. Lin defaulted on the loan, prompting Mr. Xu to sue in the Changzhou Zhonglou People’s Court. The case was dismissed. 

Chinese judge explains why the Bitcoin lending contract was invalid and therefore denied relief for breach of contract.
Chinese magistrate Ming Wang explains why the Bitcoin lending contract was invalid and therefore denied relief for breach of contract. (Screenshot)

In supporting the judgment, Ming Wang, vice-magistrate of the Changzhou Zhonglou People’s Court, told reporters that Bitcoin is a digital commodity that does not hold the same legal status as fiat currencies. Therefore, the asset can neither be subject to a legal enforcement action, enter circulation, or be used to ” award compensation.”

“The lender bears ALL risks [when lending crypto],” Wang warned. That said, in another ruling dated Nov. 29, the Hangzhou Internet Court wrote that digital assets such as nonfungible tokens are “online virtual property” that should be protected under Chinese law. 

Aside from outright ownership, all forms of cryptocurrencies and transactions are currently illegal in China. The country has been cracking down on private blockchain initiatives in favor of the Central Government’s efforts to promote centralized blockchain, such as via the digital yuan CBDC



China’s disappearing Web3 founders 

Just last month, Chinese cross-chain bridge Multichain was still one of the biggest in the DeFi sector. While its reputation took a hit due to the disappearance of its co-founder, Zhaojun He, the protocol still had around $1.5 billion in total value locked at the start of July.

Then on July 14, investors’ worst fears came true after Multichain developers revealed that Zhaojun had been arrested by Chinese police nearly two months prior. Because Zhaojun held discretionary control of Multichain’s entire server-based and private keys, they said the protocol had to be shut down.

But the question left many readers pondering, how does the arrest of a single individual lead to the shutdown of an entire enterprise and the disappearance of enterprise funds? One anonymous user in the Multichain Telegram chat claimed:

“It’s become a total supply chain. Third-party tracking companies will supply leads to the police to take them into custody as long as the [Web3] co-founder is in China and has money. Where do you think the police’s case came from? Third-party tracking companies make at up to 10 figures [CNY] from such tipoffs.” 

While Zhaojun is currently detained without any revelation of the charges — or any news whatsoever — the Multichain funds supposedly “stuck” in the protocol are on the move. Blockchain security firms, such as Bitrace and PeckShield, have revealed that since Zhaojun’s arrest, assets stored on the Multichain bridge had been swapped for stablecoins and transferred out of the protocol. The move prompted stablecoin issuers such as Circle and Tether to freeze over $63 million of suspicious transactions linked to Multichain.

Multichain
A man alleged to be Multichain co-founder and CEO Zhao Jun (Telegram)

In a series of screenshots seen by Cointelegraph, exchanges such as Binance are also investigating stablecoin deposits to its platform linked to the Multichain incident. Meanwhile, whoever is making the transfers has appeared to smarten up as well, with swaps of users’ assets now being done through privacy coins as opposed to traceable assets.

Some observers theorize that the circumstantial evidence points to the Chinese police moving the coins. For starters, the In a similar incident, Wuwei Liang, brother of CoinXP co-founder Liang Liang, wrote in regard to the ongoing criminal proceedings against his brother and the firm:

“The virtual currency involved in the case [seized from CoinXP by police] was transferred to other wallet addresses by the Wuxi Public Security Bureau, and 20 Bitcoins disappeared during the transfer process and have not been recovered so far.”

Liang Liang’s trial is ongoing and the blockchain executive is currently charged with “illegal solicitation of public funds” and running a “multi-level marketing” scheme. The latter, by the way, carries the penalty of civil forfeiture of all personal and enterprise assets if convicted, and the trial is not going well.

The crackdown appears to have started with China’s own state-blockchain centralization efforts this year. On May 31, Cointelegraph reported that offices of the Chinese offshore-yuan stablecoin issuer CNHC had been raided by police. Its executive had been reportedly detained and like Multichain, no news has been heard from them since.

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Is Ethereum left and Bitcoin right?

Huobi in trouble once again Everything is just fine

If I could sum up with everything that goes on in blockchain from day to day using one phrase, it’d be “all is not, as it seems.”

On August 6, local news outlets in Hong Kong reported that senior executives of cryptocurrency exchange Huobi had been arrested by Chinese police. The exchange subsequently denied this as “fake news.” Chinese blockchain personality Justin Sun, the de-facto owner of the exchange, also labeled the news as fear, uncertainty, and doubt (FUD). 

But as Adam Cochran, partner of Cinneamhain Ventures, claimed on Twitter that Sun allegedly withdrew $60 million from the exchange after the news broke out. Cochran also claimed that some Huobi staff “are currently under criminal investigation,” citing an insider at Tron (Sun’s blockchain project) who has “first hand knowledge of the investigation.”

However, according to Sun, Huobi is doing just fine. On August 1, Sun claimed that the exchange generated more than $85 million in profits in Q2 2023, with $100 million in profits projected for Q3 2023. Pretty impressive, considering that the exchange suffered an internal revolt just earlier this year after the firm allegedly slashed a vast majority of employment benefits.

But anyway swirling rumors around Huobi may be behind its USDT reserves declining to less than $100 million from $630 million last month, while its total assets have fallen to $2.5 billion compared to $3.1 billion in the same period.

Huobi's total assets vs. inflows (DeFiLlama)
Huobi’s total assets vs. inflows (DeFiLlama)

Zhiyuan Sun

Zhiyuan Sun is a journalist at Cointelegraph focusing on technology-related news. He has several years of experience writing for major financial media outlets such as The Motley Fool, Nasdaq.com and Seeking Alpha.

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First Chinese CNH stablecoin debuts as global race heats up

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First Chinese CNH stablecoin debuts as global race heats up

First Chinese CNH stablecoin debuts as global race heats up

Governments around the world are exploring and launching stablecoins to remain competitive against dollar-pegged digital fiat tokens.

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Sir Ed Davey brands Elon Musk a criminal and calls for his arrest for ‘allowing online harm to children’

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Sir Ed Davey brands Elon Musk a criminal and calls for his arrest for 'allowing online harm to children'

Sir Ed Davey has branded Elon Musk a criminal and called for him to be prosecuted for “allowing online harm to children” on his social media platform X.

The Lib Dem leader told Sky News’ Sunday Morning with Trevor Phillips the billionaire owner of X, formerly Twitter, is “inciting violence” and his social media platform is actively failing to protect children.

Sir Ed, speaking from the Lib Dem conference in Bournemouth, said Mr Musk could be prosecuted under the Online Safety Act, under which social media companies have a legal duty to protect children from harmful content and their directors are liable for criminal prosecution for breaching it.

Elon Musk. Pic: Reuters
Image:
Elon Musk. Pic: Reuters

Asked if he is calling Mr Musk a criminal, Sir Ed did not miss a beat as he said: “Yes.

“Not just because of the awful things he’s done in inciting violence, and, for example, he says a civil war in our country is inevitable, that our democratically elected government should be overthrown.

“They were bad enough. But on his platform, they’re examples of adverse, pushing people on self-harm, on grooming, even selling videos showing paedophile acts, of child sex abuse acts and I think he should be held to account for them, him personally and his business.

“Ofcom now has the powers under the Online Safety Act.”

More on Elon Musk

He said if Mr Musk comes to the UK, he should be arrested.

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Lib Dems toughen up immigration rhetoric

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Sir Ed Davey enters conference with marching band

Mr Musk was accused of inciting violence during a march organised by Tommy Robinson in London last week.

He told the protest via video link: “This is a message to the reasonable centre, the people who ordinarily wouldn’t get involved in politics, who just want to live their lives. They don’t want that, they’re quiet, they just go about their business.

“My message is to them: if this continues, that violence is going to come to you, you will have no choice. You’re in a fundamental situation here.

“Whether you choose violence or not, violence is coming to you. You either fight back or you die, that’s the truth, I think.”

Sir Ed Davey said Elon Musk should be arrested
Image:
Sir Ed Davey said Elon Musk should be arrested

Sir Ed said it is “shocking” that Mr Musk removed some of X’s child safety teams when he took over Twitter in 2022 and accused him of just being “interested in his bank account”.

“I’m interested in the safety of our children, and it is quite wrong that his business puts on these adverts,” said the Lib Dem leader.

“It’s disgusting and I hope everybody will agree with me and the Liberal Democrats that we should take really strong action against him.”

After Mr Musk acquired Twitter, many of its child safety staff were laid off or resigned, and the platform’s trust and safety council was disbanded.

Child protection experts have accused Mr Musk of leading a “race to the bottom on safety”.

Elon Musk with Donald Trump in the Oval Office. Pic: AP
Image:
Elon Musk with Donald Trump in the Oval Office. Pic: AP

Ofcom, the UK’s independent media regulator, which has the power to prosecute directors of social media platforms under the Online Safety Act, has launched an investigation into X’s handling of child sexual abuse content.

This is not the first time Sir Ed has hit out at the world’s richest man, as he called for the US ambassador to be summoned in February “to ask why an incoming US official is suggesting the UK government should be overthrown”.

Mr Musk reacted by calling Sir Ed a “snivelling cretin”.

Sir Ed is expected to reiterate his call for Mr Musk’s arrest at his conference speech on Tuesday.

Pic: Reuters
Image:
Pic: Reuters

He will accuse Mr Musk of being motivated by “his own ego, power and wealth, rather than the rights and freedoms of the British people”.

The Lib Dems will also table a parliamentary motion summoning Mr Musk to the House of Commons “to be reprimanded for his actions”.

Sky News has approached X and Elon Musk for comment, but as of publication has received no response.

X maintains it has “zero tolerance for child sexual abuse material” and claims tackling those who exploit children is a “top priority”.

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Sir Keir Starmer set to announce formal recognition of Palestine as a state

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Starmer to announce formal recognition of Palestine as a state

The UK will formally recognise Palestine as a state, it is understood.

Sir Keir Starmer is expected to make the announcement today after he said in July that the government would make the move unless Israel met certain conditions.

The prime minister had called on Benjamin Netanyahu’s government to take substantive steps to end the “appalling situation in Gaza“, agree to a ceasefire, commit to a long-term sustainable peace, allow the UN to restart the supply of aid, and not annex the West Bank.

The Israeli foreign ministry furiously rejected his statement, with Mr Netanyahu claiming that “Starmer rewards Hamas‘s monstrous terrorism and punishes its victims”.

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Could recognition of Palestine change the West Bank?

Ilay David, brother of Hamas hostage Evyatar David, who was seen emaciated in a video last month, said giving recognition was “like saying to Hamas: ‘It is OK, you can keep starving the hostages, you can keep using them as human shields.’

“This kind of recognition gives Hamas power to be stubborn in negotiations. That is the last thing we need right now.”

There has been no ceasefire, and the situation in Gaza has deteriorated, with a declaration of a famine in Gaza City and the expansion of Israeli military operations.

Israel has launched a major ground offensive to seize all of Gaza City and destroy Hamas in an operation which has prompted widespread condemnation, with UK Foreign Secretary Yvette Cooper calling it “utterly reckless and appalling”.

More on Gaza

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What changed in UK’s Gaza policy?

Earlier this month, a UN commission of inquiry concluded that Israel has committed genocide against Palestinians in Gaza. Israel said the claim was “distorted and false”.

The UK will join 147 of the 193 members of the UN who recognise Palestine ahead of the UN General Assembly in New York on Monday.

Other nations, including France, Australia and Canada, have said they plan to take the same step at the UN gathering as part of a broad international effort to put pressure on Israel.

And the Muslim Council of Britain welcomed the prime minister’s move, but urged that recognition must also come with “tangible action”.

During a joint news conference with the prime minister at Chequers on Thursday, Donald Trump said he disagreed with recognition, and US politicians have urged the UK and other allies to reverse their stance.

Sir Keir Starmer is expected to formally announce the move on Sunday. Pic: PA
Image:
Sir Keir Starmer is expected to formally announce the move on Sunday. Pic: PA

Sky News understands that Israel is considering options in response to the UK’s decision, but the strength of that reaction is still under consideration.

Read more:
Palestinian minister says UK recognition of state would be ‘courageous step’
What does recognising a Palestinian state mean?
Gaza could be ‘real estate bonanza’, Israeli minister says

Family members of some of the 48 hostages still in captivity, after Hamas and other militant groups stormed into Israel on 7 October 2023, have written an open letter to Sir Keir, condemning the move.

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Israel ramps up attacks on Gaza City

“Hamas has already celebrated the UK’s decision as a victory and reneged on a ceasefire deal,” they said.

“We write to you with a simple plea – do not take this step until our loved ones are home and in our arms.”

Meanwhile shadow foreign secretary Dame Priti Patel accused the prime minister of “capitulating” to his backbenchers to shore up his leadership.

“With the terrorist organisation Hamas still holding hostages in barbaric conditions and glorifying acts of terror, Starmer is sending a dangerous message, where violence and extremism are tolerated and rewarded,” she said.

The UK government is understood to be looking at further sanctions on Hamas, and has demanded the group release all hostages, agree to an immediate ceasefire, accept it will have no role in governing Gaza, and commit to disarmament.

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