Chinese Official Gets Life Sentence for Bitcoin Mining and Corruption

A former Chinese government official has been sentenced to life in prison for running an illegal Bitcoin mining operation worth over $300 million and engaging in corruption. The court found him guilty of abuse of power, bribery, and falsifying data.

The Rise and Fall of Xiao Yi

Xiao Yi was a former member of the Jiangxi Provincial Political Consultative Conference Party Group and Vice Chairman. He was accused of using his influence and connections to provide financial and electricity subsidies to Jiumu Group Genesis Technology, a company based in Fuzhou that operated more than 160,000 Bitcoin mining machines. He also instructed relevant departments to fabricate statistical reports and adjust the classification of electricity consumption to cover up the mining operation.

Chinese Official Gets Life Sentence for Bitcoin Mining and Corruption
Chinese Official Gets Life Sentence for Bitcoin Mining and Corruption

According to local media reports, from 2017 to 2020, Jiumu’s electricity consumption accounted for 10% of Fuzhou’s total electricity consumption. The Bitcoin mining enterprise generated a revenue of 2.4 billion Chinese yuan ($329 million) and a profit of 1.2 billion yuan ($164 million).

However, Xiao’s illegal business activities were exposed in 2021, when the Chinese authorities launched a nationwide crackdown on cryptocurrency mining and trading. He was arrested and charged with abuse of power, illegal business operations, and corruption. The corruption charges stemmed from non-crypto-related activities of bribery from 2008 to 2021.

The Verdict and the Implications

On August 22, 2021, the Intermediate People’s Court of Hangzhou City sentenced Xiao to life in prison for his crimes. The court also confiscated his personal assets and ordered him to return the stolen funds and bribes. The court said that Xiao pleaded guilty and repented, and cooperated with the investigation.

Xiao’s case is one of the most severe punishments for cryptocurrency-related crimes in China, where the government has taken a hard stance against the industry. China has banned all forms of cryptocurrency transactions, exchange operations, and fiat-to-crypto onboarding, but has not prohibited outright ownership. However, some recent court rulings have invalidated contracts involving cryptocurrencies, making it difficult for users to seek legal protection or recourse.

The Chinese government’s crackdown on cryptocurrency mining has also had a significant impact on the global Bitcoin network, as many miners have been forced to shut down or relocate to other countries. According to the Cambridge Bitcoin Electricity Consumption Index, China’s share of the global Bitcoin mining power has dropped from 65% in April 2020 to 46% in April 2021.

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