China's High-Profile Official Sentenced to Life in Prison for Bitcoin Mining

• Financial

On August 22, a startling revelation emerged from China’s judicial system. Xiao Yi, a high-ranking Chinese official, was sentenced to life in prison on corruption and abuse of power charges. The charges revolved around the illegitimate management of a colossal $329 million Bitcoin mining company and unrelated bribery activities spanning over a decade.

Bribery and Deception: A Two-Pronged Scandal

From 2008 to 2021, Yi was reportedly involved in bribery activities, an issue that has long plagued various sectors of China's administration. This portion of the scandal, however, was unrelated to cryptocurrency.

What truly stunned many was Yi's engagement in illicit operations related to a Bitcoin mining company worth 2.4 billion Chinese yuan. Between 2017 and 2021, under Yi’s watch, financial and electricity subsidies were siphoned off to the Jiumu Group Genesis Technology.

Located in Fuzhou, this enterprise once boasted control over a staggering 160,000 Bitcoin mining machines. According to prosecutors, Yi's tactics to maintain the company's veil of secrecy involved manipulating the system. He instructed relevant departments to concoct misleading statistical reports and amend the categorization of power usage.

To underscore the magnitude of the operation, from 2017 to 2020, Jiumu's electricity consumption represented a whopping 10% of the entire city of Fuzhou's usage. However, there was a glimmer of accountability as the Hangzhou People’s Court’s ruling magistrate noted, “Yi pleaded guilty and repented, actively returned the stolen funds, and all the bribes and their profits have been seized”.

China's Tightening Noose on Cryptocurrency

Despite being a global leader in many technological spheres, China has taken a stringent stance against certain cryptocurrency operations. Currently, the nation prohibits cryptocurrency transactions, exchange operations, and fiat-to-crypto onboarding.

Yet, direct ownership remains permissible. This complex relationship was evident when, on August 3, a Chinese court declared a $10 million Bitcoin loan agreement null and void, citing the country's ban on Bitcoin, leaving the lender without any legal means of recouping the debt.

Further emphasizing the nation's stern view on cryptocurrencies, just ten days later, another incident made headlines. A Chinese national faced a nine-month jail sentence merely for assisting a friend in purchasing Tether, profiting a modest $20 from the deal.