Xiao Yi, a former Chinese government official has been sentenced to life in prison for supporting a $329 million illegal Bitcoin mining operation and other unrelated charges, including accepting bribes and abuse of power.
According to a report by the local state media, charges filed by the Intermediate People’s Court of Hangzhou City stem from his time serving as the vice-chairman of the Jiangxi provincial committee of the Chinese People’s Political Consultative Conference and Communist Party chief of Fuzhou City between 2008 and 2021.
As per the court statement, Xiao accepted roughly $17 million in bribes from 2008 until 2021 in exchange for providing favors to certain companies and individuals.
The Hangzhou court said the 61-year-old’s actions caused heavy losses to public property and “damaged national interests”. The court even ordered the confiscation of all his personal property.
Chinese Government Official Sentenced For Supporting Illegal Bitcoin Mining Operation
The charges imposed for abuse of power come from his time serving as Fuzhou city chief between 2017 and 2021.
During that period, Xiao provided financial and electricity subsidies to Jiumu Group Genesis Technology, a bitcoin mining firm based in the city that at one point operated more than 160,000 crypto mining machines.
The former official had asked relevant state departments to fabricate reports on the company’s power usage, which according to the court document, had accounted for 10 percent of Fuzhou’s total electricity consumption.
Xiao presented Jiumu Group Genesis Technology as a big data and cloud computing business and even asked company employees to “put up a performance” when other government officials made visits to inspect the facilities.
Xiao is said to be the most senior Chinese government official to have been punished for supporting cryptocurrency mining operations in the country. In January, he was publicly named and shamed on national television for his crimes.
He admitted to his mistakes on the program aired on the state-run China Central Television (CCTV), stating that he is a sinner who failed the people of Fuzhou and a person who acted recklessly, causing grave losses to the public because of his “distorted view of political achievements”.
Beijing Strictly Prohibits The Use Of Cryptocurrencies
Since 2017, Beijing has been imposing stringent regulatory policies to crack down on all forms of cryptocurrency-related activities. This includes a complete ban on crypto transactions, exchange operations, mining operations, and fiat-to-crypto onboarding. However, the government has not yet prohibited the Chinese population from owning crypto assets.
While the Hong Kong government is busy introducing regulatory-friendly policies to attract crypto service providers that fled China and turn the autonomous region into a global virtual assets hub, mainland China is promptly sticking to its cryptocurrency ban.
Recently, prosecutors in Pingnan country, in the southern autonomous province of Guangxi, filed criminal charges against four executives from crypto mining firm Shenzhen Shikongyun Technology for organizing and leading a pyramid scheme.
The accused had allegedly onboarded 100,000 members to its Filecoin (FIL) mining platform, asking them to either buy or lease the company’s mining equipment.
The members were also promised high returns by the company for adding new participants to the scheme. In the process, the group raked in a combined $115 million in cash and USDT stablecoins.
In another case, a Chinese man who lent $10 million worth of Bitcoin as a loan to another individual lost his appeal in court after it was dismissed on the grounds of the country’s ban on transactions involving cryptocurrencies.
The two parties had initially agreed upon the repayment terms in a written contract. But shortly afterward, the borrower defaulted on the loan, prompting the man to file a lawsuit in the Changzhou Zhonglou People’s Court. The court ruled that the Bitcoin lending contract was invalid as the state does not consider crypto assets legal, leaving the man with no option for legal debt recovery.
In May, Chinese police raided the Shanghai office of Trust Reserve – an off-shore issuer of Chinese yuan-pegged CNH Coin (CNHC) and Hong Kong dollar-pegged HKD Coin (HKDC) stablecoins – and detained its chief executive.
The company had only recently secured $10 million in funding in a round led by KuCoin Ventures that was also participated in by major crypto venture capitalists like IDG Capital and Circle Ventures.
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