Category Archives: China Blockchain News

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“Dream City” International Blockchain Collaboration Between China and ConsenSys

In a world first, the Chinese City of Xiong’an will be home to a blockchain deployment program, transforming the newly-established ‘number-one urban project‘ into a “dream city”, backed by President Xi Jinping.

Mega-cities

Over the past three decades, urban development in China has been exploding; major cities have been receiving record levels of funding, and areas such as Shenzhen and Shanghai’s Pudong have been placed on a special list for development throughout the past 40 years.

Xiong’an is one of the most recent additions to the list of “mega-cities” and has been a largely underdeveloped area. In April, plans for the Xiong’an New Area were revealed as well as documents guiding the cities development through to 2035.

Bolstered by blockchain

These ambitious developments have received a rocket-fueled boost as a significant partnership between Xiong’an and blockchain development company ConsenSys.

On 23 July, ConsenSys and the Xiong’an government signed a memorandum of understanding (MoU) for the “dream city” project, marking the first time that Xiong’an has publicly recruited a foreign development studio to aid in its blockchain efforts.

Blockchain is high up on the city’s technological agenda, it is one of several technological fields that the government has listed as part of cutting-edge and can transform Xiongan into a leading tech hub for the country.

Joseph Lubin, Ethereum co-founder and ConsenSys founder said in a statement, “As one of our first major projects in the People’s Republic of China, we are excited to help define the many “use cases” that could benefit from the trust infrastructure enabled by Ethereum technology.”

According to the South China Morning Post, the full MoU has not been published, though in a statement ConsenSys wrote, it would “… follow with agreements addressing different aspects of this innovative multi-faceted initiative, and establish Xiongan as a next-generation smart city and a leading blockchain innovation hub”.

ConsenSys has several global partnerships on the go; Ireland is in partnership with the studio to develop and deploy Ethereum-based blockchain platforms and products, and the Philippines, for example, are working with the studio to bridge gaps between the unbanked and traditional financial services.

Billions upon billions

China is pumping extraordinary amounts of money into domestic blockchain developments. In April, one of the specially designated mega-cities Shenzhen was reported to be investing CNY 500 million (USD 80 million) into blockchain startups in the city in a public-private partnership.

Before that, the city of Hangzhou received USD 1.6 billion to invest in blockchain effort. The funding project has already opened a Blockchain Industrial Park with ten blockchain projects from around the world being “successfully contracted” into it.

Most recently, Nanjing City is set to receive CNY 10 billion (USD 1.48 billion) worth of investment to support public blockchain projects in another public-private fund that will support academic innovations, blockchain startups as well as established companies seeking to adopt blockchain technology.

 

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Chinese Government Not Withdrawing From $1.6B Blockchain Fund

In the midst of a scandal involving a major partner of the Xiong’an Global Blockchain Innovation Fund, a local news report that claimed the local government will be withdrawing its financial support has been denied by the fund.

Venture capital for blockchain

The fund is one of the largest of its kind in China as the country ramps up its support of blockchain initiatives, businesses, smart-cities and other blockchain related industry and institutions.

Worth USD 1.6 billion, part of the venture capital fund is coming from Tunlan Investment, a Hangzhou firm; 30% (USD 400 million) is being provided by the Hangzhou city government.

Government withdrawal

The report was published by the China Business Journal on 26 July and stated that the Hangzhou city government was demanding the fund to stop publicizing itself as a government-backed fund.

The piece refers to an “informed person close to Li Xiaolai” who made indications that governments decision withdraw came down to the aforementioned scandal, which have had negative impacts on the company and city government.

Cause for speculation

Conflict soon erupted when a public feud between Bitcoin advocate Xiaolai and venture capitalist Chen Weixing eventually led to Li’s resignation from the Xiong’an Blockchain Innovation fund, of which he was the managing partner.

Weixing accused Li of being a “fraud” and branded him “a tumor” of the industry, going so far as to accuse the Bitcoin evangelist of owing BTC 30,000 to a group of investors, a debt of which allegedly dates back to 2013.

After a period of back-and-forth responses from the pair, an audio recording from a private meeting that took place in January 2018 was leaked in July. In the leak, Xiaolai made brash comments against companies such as NEO, Ripple and Binance, which he called a “scam”. In early July, Li resigned.

Funding “not suspended”

Though the China Business Journal report had made a response denying that the Xiong’an fund was suspended, he also offered further clarification to CoinDesk that the government had not presently withdrawn or pulled out of future funding.

On 26 July, the fund also issued a statement, further denying the report saying, “There are many false reports on the report that “Xiong Fund is suspected of being stopped by the government for propaganda and investment.” Xiong’an Fund has not received any relevant notice from the government.”

Additionally, the fund says that it will continue with its original intentions, and will retain its right to “pursue legal liability for false reporting media”.

 

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Bitcoin Evangelist Li Xiaolai Resigns from $1B Government-Backed Blockchain Fund

One of China’s most prominent cryptocurrency investors and Bitcoin advocates, Li Xiaolai, has resigned from the Hangzhou Xiong’An Blockchain Innovation Fund, giving up his position as managing partner of the USD 1 billion Chinese startup.

A brief timeline of disputes and allegations

The resignation comes after venture capitalist Chen Weixing publicly began making hostile comments toward Li. Branding the investor as a “fraud” and a “tumor” of the industry, he went on to accuse Li of owing BTC 30,000 to a group of investors, dating back to 2013. According to Chen, this was not repaid as Li had “gambled” the funding away.

Li had later responded in detail to these accusations: “Once again, it’s not true. The fund was a private equity ‘equivalent to 20 million yuan (USD 3 million)’. And I never promised to guarantee the fund’s value using Bitcoin. My quote was ‘We hope (this fund) can outrun the Bitcoin market’. As for the ‘due in September’ part, the fund was set up in a ‘4+1’ model, so it ought to due in September this year. Chen is just muddying the water.”

Audio leak

The dust had barely settled on the matter before a recording of a private meeting that took place in January 2018 was leaked onto social media on 3 July. As reported by local media outlet Baidu, Li took aim at NEO, Tron, Ripple and Binance, going so far as to call the exchange a “scam”.

Chen was quick to follow up the scandal and further questioned the Xiong’An Blockchain Fund, challenging the government’s significant financial backing.

In April 2018, the Blockchain Industrial Park was launched in one of China’s biggest tech hubs, Hangzhou, home to some of the largest tech firms in the country such as Alibaba; USD 400 billion of funding was provided from the government of the city of Hangzhou.

The resignation

On Monday, 9 June, Li announced the resignation on his Weibo account, believing that his decision would maintain the integrity and reputation of the government-backed investment fund.

He wrote: “The series of defamations from Chen Weixing against myself has brought material and negative impacts on the reputation of Xiong’An Blockchain Fund… To let the Hangzhou government continue its push for blockchain development, I will resign from my role as a managing partner.”

However, Li will not be going down without a fight. Last Friday, he announced via his WeChat channel that a defamation lawsuit had been filed against Chen, to which Chen responded, calling for other “victims” to use this opportunity to take on Li in court.

 

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