Chinese investors allegedly behind Texas-based crypto mining site

Thanks to Binance, Chinese nationals are able to move money into the US undetected

Jerry Yu is a 23-year-old NYU student and a Chinese national. He is also the majority owner of a Texas-based crypto mining facility called BitRush. But it appears that there is more to the company, which was acquired last year. It was recently revealed that the company, bought for $6 million, is backed by undisclosed Chinese investors thanks to Tether, a cryptocurrency routed through Binance, a cryptocurrency exchange.  

According to a recent report from The New York Times, the story started with a series of lawsuits from contractors who claimed they weren’t paid for the work they did on the facility, located in Channing, Texas. 

Documents, that normally wouldn’t have seen the light of day, emerged that pointed to these Chinese investors in BitRush – described in the NYTimes as “not only Chinese citizens but citizens in highly political and influential business positions.” This is raising concerns about how the funds were transferred from China to the US. It’s worth noting that the Chinese government banned crypto mine operations in 2021.

The Texas facility’s purchase with cryptocurrency provided the investors with anonymity as transactions in those cases are routed through an offshore exchange. No one has to know the origin of the financing.

This process enables Chinese investors to avoid the US banking system, and its federal regulators and work around the Chinese restrictions on money leaving China. 

Normally, if a US bank was receiving funds, it would know where the money was coming from and – significantly – would be required by law to report any suspicious activity to the US Treasury.

The NYTimes reports that the public money trail ends at Binance. Last month, Binance pleaded guilty to violating anti-money laundering (AML) regulations, agreeing to pay over $4.3 billion in fines. The case was based on Binance’s failure to comply with laws including verifying customers’ identities and flagging suspicious money transfers.

Chinese investors use the mines to generate cryptocurrency – mostly Bitcoin – which they can then cash in for US dollars. 

Previously, the NYTimes reported on growing concerns about Chinese Bitcoin mines in the US and its impact on national security. With the spectacular failure of cryptocurrency FTX, its founder Sam Bankman-Fried awaiting sentencing and the growing realisation that the unregulated nature of cryptocurrencies is a precursor to financial crime, is it possible that crypto is dead?

Read more.

Source link: by VinciWorks at