Chinese Official Receives Life Sentence for Bitcoin Mining and Corruption

A Chinese government official has been handed a life sentence due to charges of unlawful business operations connected to managing a substantial 2.4 billion Chinese yuan ($329 million) Bitcoin mining enterprise, as well as unrelated corruption allegations.

The Intermediate People’s Court of Hangzhou City, as reported by local media, issued the sentence on August 22 to Xiao Yi, a former member of the Jiangxi Provincial Political Consultative Conference Party Group and vice chairman. The life sentence was based on his involvement in corrupt practices and misuse of authority.

The corruption charges stem from activities unrelated to cryptocurrencies and involve bribery spanning from 2008 to 2021. The abuse of power allegations, covering the period from 2017 to 2021, revolve around Yi’s role in granting financial and electricity subsidies to Jiumu Group Genesis Technology. This Fuzhou-based company was responsible for operating over 160,000 Bitcoin mining machines at one point.

Prosecutors argued that Yi orchestrated a cover-up operation, urging relevant departments to falsify statistical reports and manipulate electricity consumption classifications. Between 2017 and 2020, Jiumu Group’s electricity consumption accounted for a significant 10% of Fuzhou’s overall electricity usage. The ruling magistrate of the Hangzhou People’s Court highlighted Yi’s guilty plea, repentance, the return of stolen funds, and the seizure of all bribes and their proceeds.

Notably, China currently outlaws all forms of cryptocurrency transactions, exchange activities, and fiat-to-crypto transactions. However, it has not completely prohibited cryptocurrency ownership. In a notable legal ruling on August 3, a Chinese court invalidated a $10 million Bitcoin lending contract based on the country’s Bitcoin ban, with no potential for debt recovery. Subsequently, on August 14, a Chinese national received a nine-month prison sentence for assisting an acquaintance in purchasing Tether (USDT), reaping a $20 profit from the transaction.

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