In our weekly roundup of news from East Asia, we bring you the latest developments that are shaping the industry. This week, we focus on China’s tough stance on cryptocurrencies, the country’s move towards central bank digital currencies (CBDCs), and the ongoing legal battle involving Three Arrows Capital (3AC) and its co-founders.
Chinese authorities have been cracking down on crypto-related activities, citing concerns over data theft and money laundering. However, insiders suggest that the real motivation behind the crackdown is China’s strict capital control rules. Chinese nationals are prohibited from buying more than $50,000 worth of foreign currencies each year without a state permit, and the same restrictions apply to large-sum Chinese yuan transactions with foreign banks. Until the advent of cryptocurrencies, these capital controls were almost foolproof. Now, authorities are taking a hard line to prevent money from flowing out of the country.
In a recent case, a Chinese individual named Mr. Chen was sentenced to nine months in prison for helping his friend buy Tether (USDT) using Chinese yuan and earning a commission. Although Mr. Chen argued that it was a peer-to-peer transaction, Chinese authorities considered it to be money laundering due to the sharing of personal bank information.
At the same time, Chinese crypto projects and their founders are disappearing at an alarming rate. The well-known incident involving Multichain is just one example. In May, employees of Chinese offshore yuan stablecoin issuer CNHC were detained by police, and they have not been heard from since. There have also been allegations of intimidation and forced confessions by Chinese police.
Related Post
Despite the crackdown on cryptocurrencies, China remains fond of blockchain technology. The government sees the potential of the Chinese yuan central bank digital currency (CBDC) in revitalizing the country’s economy through increased consumer spending. Several cities in China have already conducted digital yuan airdrops, distributing millions of digital yuan to residents. These initiatives have shown promising results, with increased digital yuan transactions reported on platforms such as Meituan, China’s largest food delivery platform.
In other news, the legal battle involving 3AC, a Singaporean hedge fund, and its co-founders has taken a turn. Creditors of 3AC suffered a setback when a US bankruptcy judge ruled that civil contempt rulings against 3AC co-founder Kyle Davies were invalid due to jurisdictional issues. It was revealed that Davies had renounced his US citizenship and acquired Singaporean citizenship, making the subpoenas issued by US law firm Teneo ineffective. The judge suggested that creditors’ attorneys bring a motion to a Singaporean court instead.
Furthermore, a Singaporean court ruled that Singapore would be the convenient forum for hearing 3AC creditors’ $140 million dispute with DeFiance Capital, rather than the British Virgin Islands as suggested by Teneo. The creditors claim that funds held with DeFiance Capital belong in the estate of 3AC, while DeFiance Capital argues that its assets belong to its independent investors.
Amidst all the legal battles, 3AC co-founders Davies and Zhu Su have been reminded by Dubai regulators that their new OPNX exchange for trading crypto bankruptcy claims is unregistered in the Emirate. They now face a hefty penalty for operating without a proper license. The co-founders also have assets in the UAE that could be vulnerable to seizure, including Davies’ prized chicken restaurant.
As the legal battles continue and more revelations surface, it remains to be seen how the situation will unfold for 3AC and its co-founders. The case serves as a reminder of the complexity and high stakes involved in multi-jurisdictional litigation, where even trivial mistakes can have significant consequences for all parties involved.
In conclusion, the crypto landscape in East Asia, particularly in China, is going through significant changes. Chinese authorities are cracking down on crypto-related activities due to concerns over capital outflows, money laundering, and data theft. However, the government sees potential in CBDCs to stimulate the economy. Meanwhile, the legal battle involving 3AC and its co-founders continues to unfold, highlighting the challenges of multi-jurisdictional litigation and the potential consequences of jurisdictional issues.
