Our weekly roundup of news from East Asia curates the industry\u2019s most important developments.<\/em><\/p>\n On Aug. 11, a Chinese individual known only as Mr. Chen was sentenced<\/a> to nine months in prison after helping his friend, Mr. Lin, purchase 94,988 Chinese yuan ($13,104) worth of Tether (USDT) and earning a commission of 147.1 Yuan ($20.24).<\/p>\n Because Mr. Chen shared his personal bank information for the peer-to-peer fiat-to-crypto transaction, Chinese authorities considered the act to be money laundering and imposed a harsh sentence.<\/p>\n Officially, Chinese authorities attribute<\/a> the tough-on-crypto approach to a spree of data theft and the use of crypto to launder proceeds of crime. However, sources tell Cointelegraph that the crackdown is more related to the country\u2019s stringent capital control rules, where Chinese nationals are prohibited from buying more than $50,000 worth of foreign currencies each year without a state permit. The same applies to large-sum Chinese yuan transactions with foreign banks.<\/p>\n The capital controls had been almost complete until the advent of crypto, sources say. The problem is further exasperated by a looming recession in China, making senior government officials wary of further money moving out of the country.<\/p>\n In July, Jingmen municipal police were tipped<\/a> off about an online poker platform operating in the city. Raiding the offices, police discovered the group had \u201claundered\u201d over 400 billion Chinese yuan ($54.93 billion) worth of gambling funds using cryptocurrencies and involving over 50,000 individuals.<\/p>\n However, the underlying criminal act that resulted in the \u201ctainted money\u201d was never mentioned. Unlike other jurisdictions, the act of gambling itself and the transfer of currencies abroad without applicable permits are deemed to be illicit activities. According to user reports, fiat-to-crypto transactions stemming as far back as 2021 are currently being audited by \u201cspecial police task forces.\u201d<\/p>\n Crypto projects and their Chinese founders are also disappearing at an alarming rate. The well-known Multichain incident aside, in May, employees of Chinese offshore yuan stablecoin issuer CNHC were detained<\/a> by police following an office raid. They have not been heard from since. Commenting on the story, Wuwei Liang, a former employee of defunct crypto exchange CoinXP, claimed<\/a>:<\/p>\n \u201cSuddenly, despite there being no complainants nor victims, the Wuxi police who came to Beijing from across the province took away all the members of the CoinXP team of China\u2019s domestic blockchain entrepreneurial team.\u201d<\/p>\n<\/blockquote>\n Liang further alleged that Chinese police would resort to \u201cintimidation\u201d to force a confession and the surrender of a project\u2019s private key. Armed with this as \u201cevidence\u201d police then charge the co-founder with \u201cfraud and multilevel marketing,\u201d bringing about a sham trial where the accused is convicted, resulting in the seizure of enterprise and user funds alike. (These allegations have not been proven in court.) We reported earlier on allegations of intimidation, detention, and even suggestions of the \u201ckidnapping\u201d of the defense counsel at the ongoing CoinXP trial<\/a>.<\/p>\n Don\u2019t misinterpret the Chinese government, however; they are quite fond of blockchain, so long as they are the ones in charge.<\/p>\n In the interest of revitalizing China\u2019s ailing economy via consumer spending, government officials have recognized the role of the Chinese yuan central bank digital currency and made its adoption a political priority. On July 27, the city of Suqian airdropped 20 million ($2.75 million) of digital yuan shopping vouchers to residents.<\/p>\n Read also<\/p>\n Crypto is changing how humanitarian agencies deliver aid and services<\/p>\n <\/a>\n <\/div>\n Unstablecoins: Depegging, bank runs and other risks loom<\/p>\n <\/a>\n <\/div>\n<\/div>\n<\/div>\n This was followed by a 10 million ($1.37 million) digital yuan food voucher airdrop by the city of Hangzhou, a 40 million ($5.49 million) digital yuan airdrop by the city of Shaoxing, a 30 million ($4.12 million) digital yuan airdrop by the city of Jianyang, and a 3 million ($0.412 million) digital yuan airdrop by the city of Ningbo, all within less than two weeks. At one test site in Chengdu, China\u2019s largest food delivery platform, Meituan, reported a 65.5% daily increase in the number of digital yuan transactions<\/a> on its platform.<\/p>\n So there are definitely real-world results to help revitalize the economy \u2014 something desperately needed right now. On Aug. 15, China announced it would stop reporting its youth unemployment figures after the metric reached a record 21.3% in June. Perhaps we can expect the (blockchain) printer to go brrr in the months ahead?<\/p>\n Lawsuits can be tough, especially when it comes to matters such as liquidating a $3.5 billion Singaporean hedge fund through multi-jurisdictional litigation. This is why a high level of competency is generally required for the attorneys who take part in such proceedings.<\/p>\n And so, creditors of Three Arrows Capital (3AC) were dealt a significant setback<\/a> on Aug. 11, when United States Bankruptcy Judge Martin Glenn said civil contempt rulings against 3AC co-founder Kyle Davies were invalid. <\/p>\n Judge Glenn explained that the subpoenas issued by law firm Teneo on behalf of creditors to Davies via Twitter starting in December were made on the basis that Davies held U.S. citizenship. However, it emerged earlier this month that Davies\u2019 renounced his U.S. citizenship to acquire Singaporean citizenship a few years prior.<\/p>\n \u201cBecause Mr. Davies\u2019 United States citizenship was a prerequisite for valid service on him in the manner effected, he was not properly served with the subpoena issued by this Court.\u201d<\/p>\n<\/blockquote>\n As a result, the U.S. court could not exercise jurisdiction against Davies, with Judge Glenn suggesting that creditors\u2019 attorneys bring a motion to a Singaporean court to compel Davies\u2019 compliance instead. It has been over a year since 3AC filed for bankruptcy.<\/p>\n In other words, after one year\u2019s time, creditors have just found out that the jurisdiction where they filed to claim debtors\u2019 assets had no jurisdiction over the debtors. 3AC co-founder Zhu Su, by the way, also has Singaporean citizenship and cannot be compelled by U.S. courts on this matter.<\/p>\n Now don\u2019t get me wrong, everyone makes mistakes, but often trivial mistakes have trivial consequences. Unfortunately, that wasn\u2019t the case here. Since the inception of proceedings, 3AC creditors have reportedly spent millions in legal fees, with some estimates going as high as $30 million. The proceedings have so far led to the recovery of several nonfungible tokens (NFTs) owned by 3AC, which were sold at two Sotheby\u2019s auctions for a combined<\/a> \u2026 $13.4 million.<\/p>\n In the last week, the liquidators of 3AC have spent millions in legal fees to find out:<\/p>\n (1) Kyle Davies is not a US citizen Both nuggets of infomation are available on a document you can purchase for SGD 5.50. https:\/\/t.co\/HZK5JjUFKS<\/a><\/p>\n \u2014 wassielawyer \uff08\u54c7\u897f\u5f8b\u5e08\uff09 (@wassielawyer) August 15, 2023<\/a><\/p><\/blockquote>\n<\/div>\n<\/figure>\n In another setback, a Singaporean court ruled<\/a> on Aug. 15 that the city-state would be the convenient forum for hearing 3AC creditors\u2019 $140 million dispute with DeFiance Capital, and not the British Virgin Islands as suggested by Teneo. 3AC creditors allege that funds held with DeFiance Capital belong in the estate of 3AC, while DeFinance Capital says that its assets belong to its independent investors. Commenting on the double whammy, Su Zhu wrote<\/a>:<\/p>\n \u201cAs the current acting liquidator for 3AC, we believe Teneo is repeatedly overreaching in their attempt to seize other investors\u2019 funds. Even on a technical and legalistic approach, the DC [DeFiance Capital] and SNC assets rightfully belong to the feeder funds of 3AC,\u201d<\/p>\n<\/blockquote>\n But in the overall context, winning a battle is easy; winning a war is difficult. On Aug. 16, Dubai regulators reminded Davies and Zhu that their new OPNX exchange for trading crypto bankruptcy claims remains unregistered in the Emirate and, correspondingly, faces a 10 million Dirham ($2.72 million) penalty for operating without a proper license. <\/p>\n Unlike in the U.S., Davies and Zhu actually own assets in the UAE vulnerable to seizure, including Davies\u2019 prized chicken restaurant<\/a>. Whether the co-founders can really keep their assets sheltered from the path of angry creditors (and regulators alike) remains to be seen.<\/p>\n Just before we published Asia Express, 3AC liquidators filed<\/a> a committal order against Zhu Su in the court of Singapore. <\/p>\n Subscribe<\/p>\n The most engaging reads in blockchain. Delivered once a![\"Chinese](\"https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2023\/08\/Screenshot-2023-08-07-235600-1024x575.png\")
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CBDC printer goes brrrr<\/h2>\n
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3AC creditors suffer humiliating defeat\u00a0<\/h2>\n
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(2) 3AC and DeFiance Capital operate out of Singapore<\/p>\n\n
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