Bitcoin miner gets life in prison, China offers bounties for crypto firms: Asia Express
Our weekly roundup of news from East Asia curates the industry’s most important developments.
HashKey Hong Kong to commence retail trading
Crypto exchange HashKey, the first licensed virtual asset provider in Hong Kong, will open its doors to residents for retail trading on August 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, COO 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. “[Investment] 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 margin trading of crypto products, nor crypto derivatives, among regulated exchanges, Weng noted.
Dark side of China’s crypto crackdown
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 amidst 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 “multi-level 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.
e-CNY green bonds debut
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 (e-CNY CBDC) 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 (GW) and a 1.0 GW solar panel facility expansion project in Wuxi.
The e-CNY CBDC has been repeatedly “shilled” for much of this year as a means of stimulating domestic spending amidst a financial crisis within the country. In the City of Tianjin alone, e-CNY 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.
FBI tracks $41M in North Korean crypto
On August 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.
Chinese Bitcoin mining magnate sentenced to life in prison
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 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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Many Labour MPs have been left shellshocked after the chaotic political self-sabotage of the past week.
Bafflement, anger, disappointment, and sheer frustration are all on relatively open display at the circular firing squad which seems to have surrounded the prime minister.
The botched effort to flush out backroom plotters and force Wes Streeting to declare his loyalty ahead of the budget has instead led even previously loyal Starmerites to predict the PM could be forced out of office before the local elections in May.
“We have so many councillors coming up for election across the country,” one says, “and at the moment it looks like they’re going to be wiped out. That’s our base – we just can’t afford to lose them. I like Keir [Starmer] but there’s only a limited window left to turn things around. There’s a real question of urgency.”
Another criticised a “boys club” at No 10 who they claimed have “undermined” the prime minister and “forgotten they’re meant to be serving the British people.”
There’s clearly widespread muttering about what to do next – and even a degree of enviousness at the lack of a regicidal 1922 committee mechanism, as enjoyed by the Tories.
“Leadership speculation is destabilising,” one said. “But there’s really no obvious strategy. Andy Burnham isn’t even an MP. You’d need a stalking horse candidate and we don’t have one. There’s no 1922. It’s very messy.”
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Starmer’s faithfuls are ‘losing faith’
Others are gunning for the chancellor after months of careful pitch-rolling for manifesto-breaching tax rises in the budget were ripped up overnight.
“Her career is toast,” one told me. “Rachel has just lost all credibility. She screwed up on the manifesto. She screwed up on the last two fiscal events, costing the party huge amounts of support and leaving the economy stagnating.
“Having now walked everyone up the mountain of tax rises and made us vote to support them on the opposition day debate two days ago, she’s now worried her job is at risk and has bottled it.
“Talk to any major business or investor and they are holding off investing in the UK until it is clear what the UK’s tax policy is going to be, putting us in a situation where the chancellor is going to have to go through this all over again in six months – which just means no real economic growth for another six months.”
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Why is the economy flatlining?
Read more:
Starmer and Reeves ditch plans to raise income tax
Former chancellor Osborne is shock contender to head HSBC
After less than 18 months in office, the government is stuck in a political morass largely of its own making.
Treasury sources have belatedly argued that the chancellor’s pre-budget change of heart on income tax is down to better-than-expected economic forecasts from the Office for Budget Responsibility.
That should be a cause of celebration. The question is whether she and the PM are now too damaged to make that case to the country – and rescue their benighted prospects.
People granted asylum in the UK will only be allowed to stay in the country temporarily, in sweeping reforms expected to be announced on Monday.
Modelled on the Danish system, the aim is to make the UK less attractive for illegal immigrants and make it easier to deport them.
Planned changes mean that refugee status will become temporary and subject to regular review, with refugees removed as soon as their home countries are deemed safe.
Under current UK rules, those granted refugee status have it for five years and can then apply for indefinite leave to remain and get on a route to citizenship.
In a social media video trailing her announcement, Home Secretary Shabana Mahmood said: “We will always be a country that gives sanctuary to people who are fleeing danger, but we must restore order and control.”
She called it “the most significant changes to our asylum system in modern times”.
An ally of the home secretary said: “Today, becoming a refugee equals a lifetime of protection in Britain.
“Mahmood will change that, making refugee status temporary and subject to regular review. The moment your home country is safe to return to, you will be removed.
“While this might seem like a small technical shift, this new settlement marks the most significant shift in the treatment of refugees since the Second World War.”
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UK looks to Denmark for tougher immigration policy
Time and money ‘wasted’ on Rwanda scheme
While the number of asylum claims across Europe has fallen, numbers in Britain have risen.
Ms Mahmood said the previous government had had “years to tackle this problem” but had “wasted” time and money on the £700m Rwanda scheme.
Read more: Could Danish model save Labour’s bacon?
Some 39,075 people have arrived in the UK after making the journey across the Channel so far this year, according to the latest Home Office figures.
That is an increase of 19% on the same point in 2024 and up 43% on 2023, but remains 5% lower than at the equivalent point in 2022, which remains the peak year for crossings.
Other changes expected to be announced on Monday include requiring judges to prioritise public safety over migrants’ rights to a family life, or the risk that they will face “inhuman” treatment if returned to their home country, the Telegraph has reported.
Denmark’s tighter rules on family reunions are also being looked at.
Read more politics news:
Under-fire Starmer aide won’t quit
Plans to raise income tax in budget ditched
Pic: Reuters
Changes will prevent refugees from ‘integrating into British life’
While some research has suggested that deterrence policies have little impact on asylum seekers’ choice of destination, but a 2017 study said Denmark’s “negative nation branding” had proved effective in limiting asylum applications.
The number of successful asylum claims has fallen to a 40-year low in Denmark, with 95% of failed asylum seekers deported from the country.
But some believe the changes could damage future generations seeking a haven from war, persecution and violence.
Enver Solomon, chief executive of Refugee Council, said: “These sweeping changes will not deter people from making dangerous crossings, but they will unfairly prevent men, women and children from putting down roots and integrating into British life.
“Refugee status represents safety from the conflict and persecution that people have fled.
“When refugees are not stuck in limbo, they feel a greater sense of belonging, as full members of their new communities with a stable future for themselves, their children and generations to come.
“We urge the government to rethink these highly impractical plans, which will also add to the backlog and chaos that the Home Office is tackling.
“Instead, they should ensure that refugees who work hard and contribute to Britain can build secure, settled lives and give back to their communities.”
Shabana Mahmood will be appearing on Sunday Morning with Trevor Phillips from 8.30am tomorrow.
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