In a significant move highlighting China’s strict stance on unauthorized cryptocurrency activities, a former Chinese government official, Xiao Yi, has been sentenced to life in prison for his involvement in subsidizing a secret and large-scale Bitcoin mining operation within the country. The operation, based in Fuzhou, consumed a substantial portion of the city’s power supply and was operated by Jiumu Group Genesis Technology.
The verdict comes as part of China’s ongoing efforts to clamp down on unauthorized cryptocurrency activities and maintain strict regulatory control over the digital currency landscape. Xiao Yi’s conviction sheds light on both his role in supporting the Bitcoin mining operation and unrelated charges of corruption.
The charges against Xiao Yi revolve around his misuse of authority to provide financial assistance and electricity subsidies to the mining company, which managed over 160,000 Bitcoin mining machines. This operation significantly contributed to the city’s power consumption, accounting for 10% of Fuzhou’s electricity usage from 2017 to 2020. Prosecutors claim that Xiao Yi attempted to cover up the illicit activities by manipulating data and creating false reports regarding electricity consumption.
In addition to his involvement in the Bitcoin mining operation, Xiao Yi was found guilty of corruption charges spanning several years, from 2008 to 2021. These allegations involve bribery activities and the misuse of various political positions he held during that time.
To mitigate his charges, Xiao Yi pleaded guilty, showed remorse, returned the embezzled funds, and faced the confiscation of both the bribes and his gains. The Hangzhou People’s Court delivered the verdict, considering the serious nature and impact of his actions.
China’s strict approach to cryptocurrencies includes a comprehensive ban on various crypto-related activities, ranging from mining to exchanges and transactions. Despite these regulations, China remains a significant player in the global Bitcoin hash rate, contributing 21% of the total hash rate according to the Cambridge Bitcoin Mining Map.
Xiao Yi’s case underscores China’s commitment to enforcing regulations in the cryptocurrency sphere, even at the expense of individuals holding government positions. The move serves as a deterrent to unauthorized crypto activities and reinforces the government’s stance on maintaining control over its digital financial landscape.
China’s ongoing efforts to assert its authority over the crypto industry are reflected not only in its regulatory actions but also in proposals such as the “Digital Identity System,” aimed at monitoring users in the local metaverse. As China continues to navigate the complexities of the digital asset space, the Xiao Yi case offers a glimpse into the country’s determined approach to uphold regulatory standards and ensure compliance within the cryptocurrency ecosystem.