China Sells Entire Stash of Confiscated Bitcoin
China is reported to have sold its entire stash of 194,000 Bitcoin (BTC), originally confiscated from the infamous PlusToken Ponzi scheme in 2019. This scam reportedly expanded to over 3,000 layers and deceived more than 2 million investors, using cryptocurrencies as its main funding channel.
In addition to Bitcoin, the Chinese authorities also seized other cryptocurrency assets, totaling 833,083 Ethereum (ETH), 487 million Ripple (XRP), 79,581 Bitcoin Cash (BCH), 1.4 million Litecoin (LTC), 27.6 million EOS, 74,167 DASH, 6 billion Dogecoin (DOGE), and 213,724 USDT.
This development would place the United States at the top of the list for government-held Bitcoin reserves, with approximately 207,189 BTC. Trailing behind in second place is the United Kingdom, holding around 61,000 BTC. Crypto watchers like CryptoQuant CEO Ki Young Ju have called for publicly verifiable on-chain data to validate China’s current holdings, citing transparency in state-controlled digital assets.
Legal Scholars Seek Clarity on Seized Crypto Assets
China banned cryptocurrency trading in 2021, announcing that digital tokens aren’t legal tender and shouldn’t be utilized as financial assets. Later in the year, the government illegalized all crypto transactions, including those made by foreign exchanges for Chinese clients.
This hard stance left a legal and regulatory vacuum on how to handle seized cryptocurrencies. Meanwhile, CNF reported that Yang Dong, a professor of law at China’s Renmin University of China, is leading a research initiative on preparing a legal framework for the regulation of crypto assets in criminal or civil cases.
Further, the absence of clear directives has led to ad-hoc interventions by the authorities. Local governments have collaborated with private enterprises to dispose of seized cryptocurrencies. A Reuters report revealed that Jiafenxiang, a Shenzhen tech company, has sold over 3 billion yuan worth of digital assets in foreign markets since 2018 at the behest of local governments. As of late last year, it was estimated that local Chinese governments held around 15,000 BTC, valued at approximately $1.4 billion.
Guo, a senior partner at Beijing Yingke Law Firm, thinks the People’s Bank of China (PBoC) is better equipped to handle seized crypto assets. However, the PBoC is opposed to decentralized cryptocurrencies like Bitcoin and Ethereum, which they believe pose a financial risk to investors.
Meanwhile, Ru Haiyang, co-CEO at HashKey, Hong Kong’s largest licensed crypto exchange, suggested that China would have been better served keeping its Bitcoin as a strategic reserve. He backed his statement by mentioning Donald Trump’s executive order, signed in March, to establish a Bitcoin National Reserve. If China has indeed dumped its BTC holdings, Trump’s dream of the US becoming the “Crypto Capital of the world” may already be playing out on the global stage.
Bitcoin has now corrected 2.7% in the past 24 hours, to bring its price to $83,692. Despite the slight drop, BTC still rose by some 8.23% in the week, with its overall market cap at around $1.66 trillion.