China’s risky Bitcoin court decision, is Huobi in trouble or not? Asia Express
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.
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.
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.
Read also
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.
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To her most savage critics – from Tories to the far left – she’s “Rotten Rayner”, a tax evader, freeloader and a “low life… on the make”.
To her trade union friends, she’s a victim of misogyny who right-wing politicians are attempting to hound out because she’s working class.
And after her tearful interview on Sky News, even among some of her political opponents there’s a degree of sympathy for Angela Rayner too.
Politics latest: Why the deputy PM nearly resigned
But amid the rancorous debate among MPs about whether she should stay or go, there’s one part of her defence that is attracting scepticism from friends and foes.
That’s her claim that she was initially given duff advice by a solicitor. Really? If she has evidence to substantiate that, she may be in the clear, though there’d no doubt be accusations of an establishment stitch-up.
But if not – and the city grandee who’s the PM’s ethics adviser – the Eton and Oxford-educated baronet Sir Laurie Magnus – rejects her defence, she’ll almost certainly have to go.
And with her resignation – or sacking – would almost certainly go her hopes of succeeding the increasingly unpopular Sir Keir as Labour leader, despite her popularity with the party’s activists.
When she arrived for Prime Minister’s Questions, just half an hour after her bombshell confession, the Labour high command placed a collective arm around her.
Sir Keir Starmer, who told MPs he was proud to sit alongside a deputy PM from a working-class background, put his hand on her left shoulder.
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Beth Rigby on Angela Rayner’s uncertain future
Badenoch misses an open goal…
Lucy Powell, the leader of the Commons, sitting the other side of the beleaguered Ms Rayner, did the same on her right shoulder.
Rachel Reeves, who also knows all about being beleaguered and shedding tears in public, looked across at her and smiled sympathetically.
If Labour feared a brutal PMQs onslaught from Kemi Badenoch, they needn’t have worried. “Why is she still in office?” the Tory leader began. So far, so good.
“If he had a backbone he would sack her,” she said in the second of her six questions. But that was it. “But let us get back to borrowing,” she continued.
Inexplicably, the Tory leader ploughed on with her pre-prepared questions on government borrowing. Labour MPs couldn’t believe their luck. Cue numerous jokes about missed open goals.
After another dud Kemi-Kaze performance at PMQs, some MPs were even speculating that Ms Rayner’s survival prospects – slim, at best – remain better than those of the Tory leader.
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Badenoch calls on PM to sack Rayner
…but others go in studs up
But in the cruel world of social media, Ms Rayner was not spared a vicious onslaught from critics from across the political divide. You’d better keep your phone switched off, Angi.
From the spiky shadow foreign secretary Priti Patel, Ms Rayner was “the property tax dodging, freeloading deputy prime minister” who had “finally admitted breaking the law and evading paying taxes owed”.
There was more. “She says that she’s sorry,” said punchy Priti. “But she’s only sorry that she was caught out. Rotten Rayner should go.”
Nadhim Zahawi, who was sacked as Tory chairman in 2023 after an inquiry found he failed to disclose an investigation into his tax affairs, added: “Did you think about my children Angela Rayner?
“Breaks my heart seeing anybody distressed about their children, but the hypocrisy really does hurt.”
But it wasn’t just Tories – who let’s not forget were denounced as “Scum!” by Ms Rayner back in 2021, in what she described as “street language” – who were brutal.
The acerbic George Galloway declared: “She’s a lowlife”. For good measure, he claimed she was “on the make” and on “Supermarket Sweep, piling her trolley full”.
Read more:
Rayner admits she should have paid more stamp duty
Rayner came out fighting in Sky interview
Rayner’s tax affairs statement in full
However, from the trade union movement, which campaigned hard for the DPM’s workers’ rights legislation, there was unequivocal support.
TUC general secretary Paul Nowak told Sky News: “Angela Rayner comes under sustained coverage because she’s a working-class woman in a way that frankly Nigel Farage, leading members of the shadow cabinet, never would.
“I think there’s a real heavy dose of misogyny when it comes to Angela.
“I wouldn’t want to see a hounded out of an important role by right wing politicians and the right wing media who frankly can’t handle the fact that a working class woman is our deputy prime minister.”
There was sympathy from one party leader, Sir Ed Davey of the Liberal Democrats, who said that as a parent of a disabled child “I know the thing my wife and I worry most about is our son’s care after we have gone”.
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Shortly after PMQs, opening a Tory debate on, yes, property taxes, shadow chancellor Sir Mel Stride opted for ridicule and mockery. “I’m absolutely certain that the deputy prime minister had a good recess,” he began.
“We saw many photographs of her down at the seaside, just off the coast in a rubber dinghy, rather like many of the other photographs over the summer given the reckless policies this government has towards illegal migration.
“She was probably celebrating the acquisition of another property for her property empire, but perhaps also slightly tinged with that nagging doubt as to whether she had indeed paid enough stamp duty.
“Well, we’ll get to the bottom of that in due course.”
Quite so, Mel. We will.
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Angela Rayner’s tax affairs interview in full
A fight for survival
Let’s also reflect that on Monday Sir Keir Starmer proudly announced: “Phase two of my government starts today.” On Tuesday, he informed MPs, he was “speaking at length” to Ms Rayner. Must have been awkward.
And on Wednesday, the PM had to watch her tearful confession, just minutes before facing MPs in the Commons.
Not a great start to phase two, prime minister. Nor for his embattled and tearful deputy, who’s now fighting for political survival.
Australia’s tax office reports self-managed retirement funds have 4% less crypto than last year, but one crypto executive says the number is likely “undercooked.”
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