In a surprising ruling by the Changzhou Zhonglou People’s Court, a man in China’s Jiangsu province named Mr. Xu lost his case against Mr. Lin regarding a 341 Bitcoin loan. Despite having a written agreement, the court determined that Bitcoin is not protected by law and therefore cannot be used for legal enforcement or compensation. Vice-magistrate Ming Wang emphasized that when lending cryptocurrencies, the lender assumes all risks. This ruling highlights the legal ambiguity surrounding cryptocurrencies in China.
The Conflicting Views on Digital Assets
China has a complex relationship with digital assets. While the Hangzhou Internet Court recognized nonfungible tokens as protected “online virtual property,” the overall stance on cryptocurrencies and transactions remains illegal. The Chinese government has been cracking down on private blockchain initiatives in favor of promoting centralized blockchain, such as the digital yuan CBDC. This conflicting approach creates confusion and uncertainty for individuals and businesses operating in the blockchain industry.
Multichain, a Chinese cross-chain bridge, faced a significant setback when its co-founder, Zhaojun He, was arrested by Chinese police. Due to Zhaojun’s control over the protocol’s server-based and private keys, the entire enterprise had to be shut down. The circumstances surrounding Zhaojun’s arrest raised questions about the involvement of third-party tracking companies and their potential role in supplying information to the police. While the exact reason for Zhaojun’s arrest remains unknown, security firms discovered that assets stored on the Multichain bridge were converted into stablecoins and transferred out of the protocol. This prompted stablecoin issuers to freeze suspicious transactions linked to Multichain.
China’s crackdown on blockchain initiatives began with its centralization efforts and has since extended to various projects. The raid on CNHC, a Chinese offshore-yuan stablecoin issuer, resulted in the detention of its executive. Similarly, the ongoing criminal proceedings against CoinXP’s co-founder, Liang Liang, have raised concerns about the seizure and disappearance of virtual currencies by the Chinese police. These actions by the Chinese government demonstrate its determination to control and regulate the blockchain industry within its borders.
The Controversy Surrounding Huobi Exchange
Recent reports of senior executives from Huobi, a prominent cryptocurrency exchange, being arrested by Chinese police have caused significant speculation and uncertainty. While Huobi denied these reports as “fake news,” rumors have circulated about the withdrawal of $60 million by the exchange’s de-facto owner, Justin Sun. Additionally, allegations of criminal investigations involving Huobi staff have further fueled the controversy. Huobi’s declining USDT reserves and total assets have added to the concerns surrounding the exchange’s stability and trustworthiness.
The Volatile Nature of the Blockchain Industry
The ever-changing landscape of the blockchain industry in East Asia is marked by controversies, legal battles, and regulatory uncertainties. The Chinese government’s approach to cryptocurrencies and blockchain initiatives creates a challenging environment for individuals and businesses involved in the industry. The lack of clear regulations and inconsistent legal rulings contribute to the overall instability and mistrust within the market. As the industry evolves, it is crucial for stakeholders to navigate the complex dynamics and adapt to the rapidly changing landscape.
The controversies surrounding Bitcoin loans, the legal status of digital assets, the shutdown of Multichain, the crackdown on blockchain initiatives, and the uncertainty surrounding Huobi Exchange exemplify the challenges faced by the blockchain industry in East Asia. The lack of coherent regulations and conflicting views on cryptocurrencies hinder innovation and investment in the region. These issues must be addressed in order to establish a more stable and conducive environment for the growth of the blockchain industry.