Chinese Blockchain-Related Company Xunlei Reports $45.3 Million Q3 Revenue

Chinese desktop software and blockchain-related company Xunlei has published its Q3 report Wednesday, Nov. 14. According to the report, the firm’s revenue increased in 2018 after the introduction of blockchain services.

The report notes that the company’s Q3 revenue reached $45.3 million, representing an increase of 1.1% year-over-year. The firm attributed $19.8 million of that revenue to its cloud and Internet value-added services sectors, which is an increase of 8.3 percent over the same period last year.

Lei Chen, CEO of Xunlei group, stated that blockchain remains one of the key investment areas for the company, noting:

“We believe that blockchain is a technology that can change our lives, and we will strive to make it available in different areas in a simpler and more cost-effective way.”

The company specifically mentioned its blockchain platform ThunderСhain, which has been launched this year, and lists recent blockchain-related partnerships, including a deal with the largest media group in China, People’s Daily, which is also the official newspaper of the Communist Party of China.

Xunlei, known for its P2P software and BitTorrent client and especially popular in China, re-oriented towards blockchain technology development in October 2017.

Back then, following a sustained downturn over two years, the company announced its first blockchain-driven initiative: the Link Token, which could be used to pay for some of Xunlei’s services. Shortly after, Xunlei became the best performing stock on Nasdaq, seeing up to 75 percent increase in shares, according to Bloomberg.

Later, in November, Xunlei came under scrutiny from China’s financial regulator following a state ban on Initial Coin Offerings (ICO). Consequently, its shares fell 40 percent. Despite the loss, Xunlei launched two new blockchain products in the spring, StellarCloud and ThunderChain Open Platform. Several months after the launch, the company’s CEO Lei Chen claimed that in Q2 Xunlei saw a $65.8 million in revenue, meaning a growth of over 70 percent on a year-over-year basis.

As Cointelegraph previously reported, in 2018 Xunlei also partnered with People’s Daily to construct a laboratory for “technology innovation” at the People Capital’s Blockchain Research Institute. Moreover, the two will develop a blockchain-driven platform to organize competitions, seminars, workshops, and promote and identify startups in the blockchain industry.

Several crypto-related companies have recently published their Q3 2018 reports: Japanese IT giant GMO Internet revealed a “historical performance” of its crypto-related sector, and Canadian Bitcoin (BTC) mining company Hut 8 declared a record revenue of $13.5 million, an increase by 126 percent compared to the previous quarter’s revenue of $5.9 million.

Moreover, Q3 2018 marks biggest quarter yet for Bitcoin revenue of Square — a U.S. financial services company that introduced Bitcoin support in its Square Cash payment app earlier this year.

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Chinese E-commerce Giant Alibaba Wins Preliminary Injunction Against Alibabacoin

Chinese e-commerce giant Alibaba has won a preliminary injunction against Dubai-based Alibabacoin Foundation in a lawsuit over the misleading use of Alibaba in their name, financial website MarketWatch reports Wednesday, Oct. 24.

The U.S. District Court for the Southern District of New York has sided with the Chinese corporation during the trademark infringement case hearing Monday, Oct. 22.

Judge James Paul Oetken, as cited by MarketWatch, said that consumer confusion could occur due to the similarity of trademarks; therefore, the Alibabacoin Foundation should not use the confusing “Alibaba” part for its brand anywhere in the U.S.

According to the Wall Street Journal (WSJ), the court’s decision implies that the Alibabacoin Foundation will no longer be able to promote or sell its cryptocurrency in the country until larger action on this case is decided.

In April, Alibaba sued the Dubai-based Alibabacoin Foundation for copyright infringement after the latter’s Initial Coin Offering (ICO) raised $3.5 mln. The Chinese giant stated that the company Alibabacoin engaged in “prominent, repeated, and intentionally misleading” behavior by using a similar name.

In addition, Alibaba said that coin’s owners did nothing to combat or correct this confusion. The initial lawsuit was accompanied by a temporary restraining order against Alibabacoin.

In May, a U.S. court ruled against Alibaba’s request for an injunction, and Judge Oetken negated a restraining order on the Alibabacoin Foundation’s activity.

In early 2018, Alibaba was rumored to have plans to launch a cryptocurrency mining platform despite strict Chinese regulations. Later, the giant clarified the rumors, stating that its P2P platform had been mistakenly taken for a crypto startup. The company also added it has never issued virtual currencies and will not host any crypto mining platforms.

In mid-October, the Alibabacoin Foundation reportedly offered for Alibaba to purchase their startup.

According to the Alibabacoin Foundation’s website, the company wants to build a fund security system improved by a secret technique for implementing a blockchain algorithm into a facial recognition hashing process. According to CoinMarketcCap, Alibabacoin is ranked 1691th in global cryptocurrency rankings, and has seen a decline in price this week dropping from $1.6 per coin to $0.37 as of press time.

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Chinese Energy Outfit to Support Spanish 300 MW Crypto Mining Farm

Chinese energy company Risen Energy has partnered with a Spanish cryptocurrency mining farm will to develop capacity of up to 300 megawatts (MW) of photovoltaic power. The news was reported by a Chinese media outlet PV Tech Thursday, October 4.

Several months after CryptoSolarTech confirmed it was building two farms near the city of Malaga using energy-efficient technology, Risen “will develop and take on engineering, procurement and construction (EPC) responsibilities for the projects,” according to the new report.

For comparison, Bitcoin network consumes an average of about 200 MW of energy for mining every day, according to the Bitcoin Energy Consumption Index.

In June, CryptoSolarTech released its own token via an ICO to assist in financing its operations, the token raising a reported $68.2 million.

“Funding for the project is secured against the launch and sale of the cryptocurrency tokens from the farms and based on a 15-year power purchase agreement (PPA),” PV Tech added.

A month previously, CryptoSolarTech reported it had raised 60 million euros ($69 million) from its first two months of existence, along with concluding a power supply contract with Barcelona-based Respira Energia.

Since the culmination of the ICO, the company’s token has lost the vast majority of its value, making it into the top ten ICO ‘losers’ in research released late September.

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Major Chinese Tech Magazine Adds Payment in Bitcoin to Show Blockchain ‘Practicality’

Beijing Sci-Tech Report (BSTR), China’s oldest media publication covering the tech industry, has announced it will offer subscriptions payable with Bitcoin (BTC), local media outlet Guangming reported Sunday, September 30.

An evidently rare occurrence from China, were government pressure has forced crypto exchanges and Initial Coin Offering (ICO) operators to halt activities over the past year, BSTR says it wishes to promote blockchain and crypto use through “practical actions.”

“[S]ubscribers can pay subscription fees to the specific bitcoin receiving address of the newspaper to complete the subscription,” Guangming confirms.

The product on offer is an annual subscription to the publication’s ‘Tech Life’ magazine, which costs 0.01 BTC (about $65).

Chinese authorities continue to clamp down on trading and promotional operations related to cryptocurrency, Cointelegraph reporting on fresh efforts to tackle overseas platforms by blocking access to them online in August.

At the same time, owning and investing in cryptocurrency is not officially illegal.

Responding to queries about the BSTR move on social media, Chinese cryptocurrency news commentator cnLedger underlined the fact that by offering a Bitcoin subscription, the publication was not breaking the law.

“Owning and investing in crypto is not banned,” it wrote.

“Otherwise Jihan (Wu, CEO) of Bitmain and Leon (Li, CEO) of Huobi would be among the first ones to get fined/caught. Thousands if not millions would have been arrested already (large amount of OTC tradings).”

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US Tech Firm Eyes Blockchain Supply Chain Solution for Major Chinese Ports

U.S.-based technology company Ideanomics has partnered with the Asia-Pacific Model Electronic Port Network (APMEN) Trade Tech Co. to streamline supply chains with blockchain tech, a press release reports Thursday, September 20.

Together with APMEN Trade Tech Co., Ideanomics aims to leverage blockchain and what it calls “super artificial intelligence” to cut out “layers of middlemen” in port clearance and shipping handling for the Asia-Pacific Economic Cooperation’s (APEC) online port clearance system.

The first instigation of the tools will take place in two major Chinese ports, Shanghai and Guangzhou, the former holding the title of the world’s busiest port in 2017.

The move marks the continuation of a growing trend in the blockchain sector, with a raft of major corporations aiming to disrupt legacy supply chain infrastructure with the technology’s introduction.

In the press release about the Ideanomics and APMEN Tech Trade Co. partnership, Bruno Wu, chairman and co-CEO of Ideanomics, stated:

“We will integrate business data from various partners, establishing a risk control model in cooperation with a single window to provide risk control services for regulatory authorities and enterprises.”

Ideanomics will have a 60 percent stake in the new venture, promising it will list on an unspecified Chinese stock exchange before the end of the year, the press release notes.

As the industry expands, some sources have more recently become skeptical of blockchain supply chain efficiency, cautioning the “hype” that may be associated with the phenomenon.

Speaking at the World Economic Forum in China last week, Tradeshift CEO Christian Lanng even went as far as to say blockchain was not suitably “high performance” in its current state to suit such purposes at scale.

“Whenever people say blockchain, I think what they’re really saying is they would like to connect things digitally,” he suggested.

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Chinese Crypto Bans on WeChat Accounts, Events, and Exchanges: What Happened and Why

This week, the government of China has cracked down on crypto-related WeChat accounts, blockchain events and digital asset exchanges, solidifying its negative stance on cryptocurrency trading and the Initial Coin Offering (ICO) market.

WeChat ban and PBoC’s warning against ICOs

On Aug. 22, Cointelegraph reported that WeChat, China’s biggest messaging app that has over 1 billion active monthly users, banned the accounts of cryptocurrency investors, users and businesses.

At the time, Lanjinger, a local financial media outlet, reported that the accounts of Deepchain, Huobi News, Node Capital-backed Jinse and CoinDaily were suspended or taken down permanently, as they violated its policy entitled “Interim Provisions on the Development of Public Information Services for Instant Messaging Tools” by promoting ICOs and cryptocurrency trading.

While CoinDaily confirmed that its WeChat channel with more than 100,000 subscribers was suspended by WeChat, Leonhard Weese, the president of the Bitcoin Association of Hong Kong, said to Cointelegraph that many accounts — destined to have been temporarily or permanently suspended — were actually taken down due to other sensitive subjects outside of crypto:

“They got blocked for talking about the vaccination scandal, not because of crypto. We find this counterintuitive, but reporting on scandals like that is far more sensitive than talking about crypto or doing crypto. I expect them to have their accounts reinstated in a week or a month.”

Expert argues WeChat ban is unrelated to crypto

In late July, the Chinese medical industry was involved in a major scandal after the country’s main drug industry watchdog released its findings that accused two pharmaceutical firms of developing inferior vaccines and deceiving local regulators.

Specifically, Changsheng Biotechnology was said to have released falsified data on the sale of more than a quarter million ineffective diphtheria, whooping cough and tetanus vaccinations, as Fortune reported.

Weese argued that, given the magnitude of the scandal in China and the global medicine sector, it is more likely that apart from the case of large-scale cryptocurrency accounts like CoinDaily, Deepchain, and Huobi News, most of the accounts that were banned by WeChat were involved in spreading misinformation about the scandal.

But, as one WeChat official confirmed to Lanjinger, the Chinese government vowed to take a stricter approach in cracking down on ICOs and token sales, and Chinese social media platforms will continue to shut down the accounts of individuals and businesses that are utilized to promote and advertise ICOs in the Chinese market, which were banned by the government in late 2017.

“[Accounts were permanently shut down for being] suspected of publishing information related to ICOs [initial coin offerings] and speculations on cryptocurrency trading,” the official said.

In a statement obtained by South China Morning Post (SCMP), the Huobi team denied that the ban of its account was related to the government’s restriction of cryptocurrency, but rather by the “broad action targeting industrial media” by WeChat.

Facebook blockchain initiative to affect China relationship?

In July 2018, Facebook, which was banned in China in 2008, obtained a license to operate an office in China. The social media conglomerate has opened a $30 million subsidiary called Facebook Technology in Hangzhou to finance emerging startups and technology-related initiatives.

“We are interested in setting up an innovation hub in Zhejiang to support Chinese developers, innovators and start-ups,” Facebook told Verge in a statement.

Given the rumors around Facebook wanting to introduce its own cryptocurrency to the global market, it remains unclear whether Facebook’s supposed idea of integrating cryptocurrencies or launching its own blockchain platform could impact its current relationship with the Chinese government.

Chinese social media platforms like Baidu and WeChat have not seen any rumors in both domestic and international cryptocurrency communities regarding cryptocurrency and blockchain-related initiatives, possibly to avoid any conflict with local financial regulators.

PBoC issues warning against ICOs

On Aug. 25, the People’s Bank of China (PBoC), the central bank of the country, issued a warning against ICOs, firmly declaring that raising funds through token sales is illegal in the country. The PBoC and local financial authorities added in an official announcement that it was difficult to track and monitor transactions made through ICOs, even if the token sales are done domestically.

“The funds for these illegal activities are mostly overseas, and supervision and tracking are very difficult.”  

The PBoC further emphasized that, while the country has encouraged the development and commercialization of blockchain technology, ICOs cannot be considered to be legitimate operations or developments on the blockchain. The document reads:

“Such activities are not really based on blockchain technology, but rather the practice of speculative blockchain concepts for illegal fundraising, pyramid schemes and fraud. The main features are as follows:

  1. Risk of illegal activities, unregulated overseas markets and inability to track or monitor transactions made in ICOs.
  2. Deceptive, opaque and concealed fundraising methods, relying on celebrities and influencers to manufacture hype around investments to tempt investors.
  3. Illegal operations like profit-generating pyramid schemes and creating Ponzi schemes by describing them as ‘financial innovations.’”

Sheng Songcheng, an adviser to the People’s Bank of China, also confirmed to state-owned publication ce.cn that the government has decided to strengthen its ban on ICOs, banning public accounts, channels and communication platforms utilized to spread information about token sales.

Rise of OTC trading, Alipay takes notice

In December of last year, during the peak of the cryptocurrency market, when the combined valuation of all of the digital assets in the market totaled at $900 billion, China’s National Committee of Experts on Internet Financial Security — a government-backed research group — reported that the volume of the over-the-counter (OTC) Bitcoin market was rapidly increasing.

“Over-the-counter trading is booming. This warrants further attention,” the researchers said.

At the time, speaking to South China Morning Post, biggest mainstream publication in Hong Kong, Weese said that Telegram has been the go-to platform for large OTC trades due to the connections between local financial authorities and the operators of WeChat, but that a small portion of investors were still using the Chinese messaging platform. Weese explained:

“Telegram is very popular for large, over-the-counter trades. While WeChat is used by the less paranoid.”

Operators of various cryptocurrency exchanges and OTC platforms — including Tidebit — confirmed the rise in activity in the Bitcoin OTC market, stating that investors who could no longer trade within the Chinese market have started to explore peer-to-peer alternatives to invest in the asset class.

This week, Alipay — the most widely utilized fintech platform in China, with a 90 percent market share and a $150 billion market valuation — formally banned OTC trading on the Alipay network, preventing users of the Alipay mobile app to initiate transactions for Bitcoin or digital asset purchases.

Red Li, a cryptocurrency researcher and the founder of Chinese cryptocurrency community 8BTC, revealed that Alipay has begun the process of shutting down accounts involved in OTC Bitcoin trading, most likely due to the government’s request for banks and financial networks to shut down all possible payment channels that could be used to send funds to cryptocurrency trading platforms.

A rough translation of the statement released by Alipay disclosed the intention of the company to permanently ban any account that is reasonably suspected of funding Bitcoin exchanges to invest in the cryptocurrency space.

With the prohibition of OTC cryptocurrency trading by Alipay, the only channel that is left for local investors to allocate funds into the cryptocurrency market is the Hong Kong cryptocurrency exchange market.

Given that investors in China still send millions of dollars to Hong Kong shell companies’ bank accounts to purchase multi-million dollar properties on the Hong Kong real estate market, the possibility of investing through Hong Kong digital asset trading platforms with local bank accounts still exists.

But, due to the country’s strict capital controls and the government’s newly implemented initiative to track down savings and brokerage accounts utilized to evade taxes, it could become even more difficult to send money out of China to overseas markets.

Ban of crypto events

This week, Binance — the world’s largest cryptocurrency exchange by daily trading volume — had to cancel a cryptocurrency-related event in Beijing on August 23, as the government announced a ban on commercial blockchain conferences and meetups.

The local government of the Chaoyang District in Beijing revealed that it has informed hotels and other large-scale venues in the country that they are not allowed to host events that are related to cryptocurrency and blockchain, as part of its larger initiative to completely crackdown on ICOs and distributed fundraising.

In an interview with The Wall Street Journal, a Binance spokeswoman said that she was not aware of the closure of the event because the exchange hosts many events across the world.

“We have so many meetups around the world, and [they] may be canceled due to any reason.”

The People’s Daily, the publication operated by the Communist Party, reported that so-called venture capital-backed media outlets in China have made a significant fortune by creating hype around ICOs, but it is unsure whether the publications will be able to continue promoting ICOs in the long term. The publication could lead investors to believe that local authorities may target independent media outlets that promote ICOs in the months to come.

“These ‘media’ outlets have made huge fortunes in the speculative waves of cryptocurrencies, but due to their nature, it’s doubtful how long their barbaric growth can keep on going.”

Conclusively, in the past two months, the government of China has allocated the majority of its resources to strengthening its ban on cryptocurrency trading and the ICO market.

Given the censorship practiced by WeChat, Alipay and other platforms, along with Beijing’s ban on crypto events, it is likely that the country will see a decline in the adoption of blockchain technology and cryptocurrency development, which is ironic, as China has spent more than $3 billion in funding blockchain projects this year.

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Chinese Retail Giant JD.com Launches Enterprise Blockchain-as-a-Service Platform

Chinese e-commerce giant JD.com has revealed its new Blockchain-as-a-Service (BaaS) platform in a press release published today, August 17.

The new tool, dubbed JD Blockchain Open Platform, aims to enable businesses to build, host and implement blockchain solutions without having to develop the technology from scratch.

According to the press release, the service will offer smart contract functionality for “public and private enterprise clouds.” JD outlines a range of potential use cases for the platform:

“The technology can help companies streamline operational procedures such as tracking and tracing the movement of goods and charity donations, authenticity certification, property assessment, transaction settlements, digital copyrights, and enhance productivity.”

JD presents the BaaS tool as the “latest expansion” of its Retail as a Service (RaaS) strategy, through which it aims to make advanced technologies and infrastructure accessible to other businesses and industries.

The platform will host an app store that offers different “blockchain bottom layers, tools and software” that have either been developed in-house or by independent software developers. While these latter are not specified in the press release, JD says it will oversee and implement “stringent quality control over the offerings on the app store.”

The first partner to use the platform is reportedly the China Pacific Insurance Company (CPIC) for creating a blockchain-based electronic invoice system to trace “fapiao” — the Chinese term for official tax authority-approved invoices.

As Cointelegraph has reported, major firms including WeChat giant Tencent, alongside China’s municipal authorities, have recently been turning to blockchain-based e-invoice systems in order to achieve a frictionless link between enterprise and consumer entities and state tax services.

While JD is by no means a newcomer to the blockchain space,  other Chinese corporations have preempted its BaaS offering. In April, telecoms giant Huawei revealed its Hyperledger-powered BaaS tool, which is similarly geared towards cloud-based smart contract development and efficient blockchain solutions for businesses.

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Chinese State-Owned Aerospace Firm Turns to Blockchain to Manage Billions of Invoices

The state-owned China Aerospace Science and Industry Corporation Ltd. is turning to blockchain technology to innovate its unwieldy electronic invoice system, according to an announcement republished on a government site August 13.

The article, from official state newspaper People’s Daily, was posted yesterday by the State Administration of Science, Technology and Industry for National Defence and outlines how blockchain will help innovate the supervision of invoices for tax purposes nationwide.

As the article notes, statistics indicate 1.31 billion Chinese electronic invoices were in circulation in 2017. By 2022, the number is forecast to hit 54.55 billion, according to a projected average annual growth rate of over 100%.

China Aerospace’s existing electronic invoice services are end-to-end, covering issuance, delivery, filing, inspection and reimbursement for the country’s taxpayers and authorities. It has already issued some 2.5 billion invoices to date, the article notes.

While electronic invoicing has reportedly entered a stage of “comprehensive promotion and adoption,” the article suggests that the existing system faces intractable hurdles, including over-reporting, false-reporting, and traceability issues in the process of invoice circulation.

China Aerospace has now created a blockchain system for electronic invoices to allow for authenticated and “credible” invoice issuance, traceable circulation and efficient and cost-effective oversight by tax authorities, according to the report.

A company representative told People’s Daily that blockchain will resolve the industry’s “pain points” and make efficient and secure tax data sharing a reality.

As Cointelegraph has reported, China’s southeastern city of Shenzhen has also recently been implementing a pilot blockchain ecosystem for invoices that was developed by Tencent — the developer of the 1 billion-user social media platform WeChat — alongside Shenzhen’s municipal taxation bureau.

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How a Chinese Crypto Hedge Fund Saw 60-Fold Returns With its Unorthodox Strategy

Crypto hedge funds have become an increasingly common sight in this flowering industry, as investors seek alternative mediums to invest into crypto assets and their underlying technologies. FBG Capital, a crypto-centric fund based in China, has become one of the largest players in this expanding sub-industry, garnering support from an array of industry leaders.

The Main-Man Behind FBG Capital — Shouji Zhou

Speaking with Forbes, Shouji Zhou, the man behind the giant that is FBG, said that he grew up in China’s Yancheng city, only a few hours north of Shanghai. Despite taking time to study applied math at the University of Electronic Science & Technology, Zhou noted that he was never there for the education, but rather the friendships and connections that could be made. Speaking more on the matter, he stated:

“Friendship, I think, is the most important thing in college. I forgot all the things I studied.”

Following his post-secondary education foray, Zhou got picked up as an IT consultant and technology legends at IBM’s Bejing office, later making a move to Oracle. Working in the technology space has its perks, with Shouji, or Vincent as he is also known, discovering Bitcoin in its early stages, quickly allocating $10,000 of his savings into the volatile asset.

After seeing success as a cryptocurrency trader, taking advantage of the countless arbitrage opportunities across worldwide exchanges, Zhou left Oracle to go full-time crypto. His original $10,000 investment quickly grew to nearly $100,000, or a near ten-fold increase in a years time. In what other industry can you generate such a return?

As the investor continued to outperform legacy and crypto market, his ambitions grew, as the crypto expert sought to bring his trading and analysis prowess to higher places. Zhou eventually joined a collective of “like-minded” individuals, who were also prominent Chinese traders, to raise over $20 million in seed funding.

FGB’s “Unorthodox” Strategy

As 2017 rolled around, the joint investment fund, which is now named FBG Capital, began to heavily invest in promising ICOs, like the ever-popular Tron, MakerDAO, and Decentraland project. As the ICO madness continued, FBG began to adopt the ideology of “high risk, high reward,” with the firm often taking insurmountable risks for a chance at hitting the elusive crypto jackpot.

Although FBG’s fondness for risk-taking has since receded, Gordon Chen, a former partner of the fund, noted that an “unorthodox” investment approach remained. As per the ex-partner’s statements, the strategy is as follows:

  • Take a deep dive of the founding team
  • Monitor an project’s chat rooms
  • Talk with scientists, engineers, investors and community leaders regarding a project’s product

Depsite the fact that the details of this strategy weren’t mentioned, the demanding levels of due diligence resulted in FBG partners traveling across the globe non-stop, in an attempt to actively meet with teams and industry experts and leaders.

This hard work has produced great returns, with some of the firm’s high-return investments, or “unicorns” as some traders refer to immensely successful trades as, including a 33x gain on OmiseGo, along with a 567% return on Zillqa.

It is important to note that the firm’s revenue streams do not consist of only ICO investments, with moves also being made with arbitrage, along with “event-driving trading,” which sees FBG bet on how certain factors and occurrences will affect the prices of crypto assets. Another one of the firm’s less-known tactic is the leveraging of relationships with cryptocurrency exchanges to aid ICOs in receiving a listing spot on popular exchanges. While many see this as devious, Zhou clarified that his firm only makes “recommendations” to an exchange’s listing team, not outright changing the outcome of a verdict.

Olaf Carlson-Wee, the head of PolyChain Capital, held high praise for one of his primary competitors, stating:

“I view FBG as just one of the most talented investor teams in this space.”

While more-respectful community members like Carlson-Wee may have nice things to say about FBG, the now-worldwide fund still receives flak for its business practices. Yubo Ruan, founder of the Palo Alto-based 8 Decimal Capital, noted:

“They’re flippers. Their reputation is pump and dump.”

This statement may be alluding to the firm’s often secretive business model, employees from FBG have continually denied these accusations. While critics can think as they like, the fund has continued forward with new projects, recently opening a fund that has attracted funding from VC giant Sequoia, the aforementioned PolyChain fund, and Bitmain.

As the market progresses, so-called “pump and dump” schemes will begin to disappear altogether, so only time will tell whether the speculative statements from FBG’s critics hold credence.

Featured Image From Shutterstock

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Blockstream Buys Mining Equipment From Chinese Manufacturer Innosilicon

Mining

Blockstream, one of the largest Bitcoin Core funding contributors, has evidently bought a lot of cryptocurrency mining equipment from the Chinese electronics hardware manufacturer Innosilicon. Does this mean that the company is setting up its own mining center?

Also Read: Thomson Reuters Eikon to Display Data on 50 Cryptocurrencies From Cryptocompare

Blockstream Buys Mining Equipment

Blockstream Buys Mining Equipment From Chinese Manufacturer InnosiliconPublicly available international shipping data (a bill of lading) reveals that a large amount of Innosilicon mining rigs has been imported from China to the US by Blockstream, the Bitcoin Core company focused on developing sidechains. Four containers holding 62 pallets marked as “TI” were sent from Hong Kong and arrived on July 26, 2018 at the port of New York/Newark, New Jersey.

“TI” is very likely referring to Terminator by Innosilicon, the ASIC manufacturer’s SHA256 miner whose latest version units are sold for $1118 USD each. And with each pallet possibly holding up to 72 units, this would mean that Blockstream could have bought about 4650 Terminators for a total value of almost $5.2 million. The company has not announced it is opening a new mining center as of yet, but such a large order would definitely suggest that is an imminent possibility. The typical hash rate of a Terminator unit reaches 17.2TH/s, giving such a center almost 80PH/s.

Background Information

Blockstream Buys Mining Equipment From Chinese Manufacturer InnosiliconBlockstream was co-founded by Adam Back, Gregory Maxwell, Pieter Wuille and others back in 2014, and is still headed by Adam Back, the CEO. It is now mainly known for developing implementation prototypes for the lightning network. If you are not familiar with the company and want to get more background information about it, David Shares recently published an Op-Ed about why is Blockstream working with former spies.

Innosilicon is a design company offering low cost, high-performance, cross-foundry, fully customizable solutions. It produces devices in areas such as tablets, cell phones, TVs, cameras, networking equipment and more. When Halong Mining launched its Dragonmint rigs earlier this year there were speculations that the machines were just rebranded Innosilicon Terminators.

What could Blockstream be doing with this much Innosilicon equipment other than set up its own mining center? Share your thoughts in the comments section below.


Images courtesy of Shutterstock, Blockstream, Innosilicon.


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Chinese Banking Giant Trials Blockchain to Issue Land-Backed Loans

The Agricultural Bank of China (ABC), one of the world’s largest banks by total assets, has completed the issuance of a loan worth $300,000 using a blockchain system.

The bank tested the technology for the first time in one of its branches in China’s Guizhou province which issued a loan backed by a piece of agricultural land as collateral, a local financial news source reported on Tuesday.

The ABC said the blockchain system is deployed among various nodes to facilitate the loan issuance including other commercial banks, the provincial branch of the People’s Bank of China as well as the local government’s Land and Resources Bureau.

By having a distributed ledger to keep parties updated with the data of borrowers and their collateral, the bank said the tamper-proof blockchain can streamline the manual process of approving loans and eliminate the problem of double spending – borrowers using the same piece of agricultural land as collateral to apply for loans from different banks.

The blockchain application is part of the bank’s effort to bring wider access to loans for farmers and businesses who own agricultural land in rural China.

Following the initial testing result, the ABC aims to further expand the application to issuing loans that are backed by other types of assets such as real estate properties in the future.

Listed in both mainland China and Hong Kong with a total asset of $3 trillion as of December 2017, the ABC is one of the “Big Four” state-owned commercial banks in China and also the fourth largest bank in the world by total asset.

Currently, out of the 26 publicly-listed banks from China, 12 of them have already started working on blockchain technology.

The ABC’s annual filing disclosed early this year shows the state-owned entity has also developed a decentralized network to issue unsecured loans in smaller amounts via an automated process for agricultural e-commerce merchants.

ABC image via Shutterstock

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Chinese Social Network Tianya is Launching a Native Cryptocurrency


The Tianya Community in China, a social network of 130 million users that seeks to create the country’s most influential platform for content and knowledge creation, has announced a blockchain based initiative to rebuild its ecosystem.

The new ecosystem will launch on Aug. 8 and will make use of a blockchain based token, TYT, according to a recently posted notice to the community.

Redesign Inititative

The Tianya Community has achieved rapid growth in just a few years with its “netizen” self-organizing model, the notice stated. The community, following six months of research and design, has deployed blockchain technology to rebuild its ecosystem to allow each citizen to participate in the community’s self governance.

The Tianya Community is one of several projects of Tianya Community Network Technology Co., Ltd., a service platform founded in 1999 in Hainan, China, and has branches throughout China and Singapore, as well as the United States.

The Tianya Token (TYT) will be the only accounting vouchers under the new ecosystem. There will be a limit of 90 billion tokens. Users will receive tokens based on their contributions to the community.

The tokens will primarily be used to complete transactions within the community.
The community will reserve 20% of TYT for team incentives, as well as promoting the operation and ecological development.

Eighty percent of the TYT will be allocated for community behavior rewards. Users will be rewarded for participating in governance and creating content. The release of tokens will be reduced every year over a 20-year period.

The notice includes an explanation of the rules by which tokens will be released to participants.

Also read: Chinese crypto giant Huobi launches billion-dollar blockchain fund

Huobi Labs Lends Its Support

Huobi Labs, a blockchain incubator that is part of the Huobi cryptocurrenecy exchange, signed an agreement with the Tianya Community in May to build a “Global Cultural and Creative Blockchain Lab” in Hainan Province. Huobi Labs also launched a billion-dollar industry fund to support the blockchain industry globally.

The Chinese government, meanwhile, under its “new era of Chinese socialism characteristics,” has provided the Hainan Special Economic Zone a mission of economic reformation. The national strategy was planned, deployed and promoted by President Xi Jiping.

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$1 Billion Chinese Blockchain Fund Denies Report of Government Pull-Out

A $1 billion Chinese blockchain fund launched in April has denied a report that local government will pull out its originally planned funding support following a recently leaked recording involving a former partner of the fund.

A news report from China Business Journal on Thursday said the Hangzhou city government has required Xiong’An (or Grandshores) Blockchain Fund to stop promoting itself by using the name as a government-backed fund.

The report said the local government has decided it will not pour in new capital anymore, making a notable withdrawal from the original plan made in April where the government agreed to back 30 percent of the fund. So far the government has allocated 30 million yuan (or around $4 million) for the project, the report said.

Citing an anonymous source close to Li Xiaolai, a well-known Chinese crypto investor and a former managing partner of the fund, the report indicated the government’s decision came after a recording of Li’s private meeting was leaked early this month which brought negative impact on the company and the government.

Yet, in the report, Li responded that the fund “is not suspended.” And he further clarified to CoinDesk that by saying that he means the government has neither suspended Grandshores’ operations nor pulled out its future funding support.

Hours later on Thursday night, Grandshores Blockchain Fund also issued a statement to deny the report, saying they have not yet received any kind of suspension notice from the government.

As previously reported by CoinDesk, Li resigned from his role as the fund’s managing partner on July 9 following the leak of a recording where he took aim at various individuals and companies in the industry with vulgar languages.

Dominoes image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Major Chinese Social Network Tianya to Launch Native Cryptocurrency Token

One of China’s top twenty-five websites, social network Tianya Club, announced it was releasing an internal blockchain-based token July 25.

In a blog post, Tianya said its 90 bln Tianyan Tokens (TYT) would function as a kind of rewards system and run in parallel to its existing Tianya Diamond token, which is not cryptographic. 

Provided users have a sufficient number of Tianya Diamond, they will receive TYT, with a total of 80 percent of supply distributed to members. The remaining 20 percent will go towards operational requirements.

“After half a year of research and design, after many rounds of communication with users, the Tianya sub-system based on blockchain technology has taken shape, and will be launched on August 8th for the public,” the platform confirmed in its post.

Speaking about its impetus to create the token, Tianya struck a non-conformist tone.

TYT was a result of the platform “adhering to the spirit of blockchain consensus, co-construction, decentralization, based on blockchain technology to reconstruct the Tianya community ecosystem,” the post states.

While technical specifications about TYT remain undisclosed, the release comes as Initial Coin Offerings (ICOs) remain on lockdown in China. As such, beyond its use as a form of status, TYT may not function as a tradeable altcoin.

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Chinese Influencers Call for Blockchain to Solve Food and Drug Safety Problem

As the Chinese population experience a food and drug safety crisis, with the latest scandal being a fraudulent rabies vaccine for babies, leading technology experts are confident that the blockchain could solve problems related to lack of transparency in China’s food and drug industries.

Decentralized Supply Chain May End Food and Drug Safety Scandals in China

The most recent drug safety scandal involved Changsheng Biotechnology, which was found to have forged documents relating to a rabies vaccine for babies, including product inspection records.

Its management is now under investigation by the police and the China Food and Drug Administration. Blockchain entrepreneurs, such as China’s biggest Bitcoin multimillionaire Li Xiaolai, are taking the debate to a national level. They are calling for the disruption of the pharmaceutical industry with the adoption of distributed ledger technology to restore public confidence in the health care system.

“If the entire vaccine supply-chain was to use the token-free blockchain solution to record everything from start to finish, then most of the problems in drug safety could be solved,” Li wrote on Chinese microblogging website Weibo.

A large number of blockchain initiatives have delved into supply chain management with the goal of making whole processes completely transparent as DLT would be able to trace and track the entire supply chain of any product by simply scanning quick-response codes. There is, however, one issue that could be fatal for the cause.

If Changsheng Biotechnology, the pharmaceutical company behind the latest drug scandal in China, were to use blockchain technology in its process, it could still manage to cheat regulators and customers. That is because if someone intends to falsify records, blockchain will carry that fake data, according to the research department of Tencent, who further explained that it is necessary to have regulations governing the use of the blockchain system.

Leonhard Weese, president of the Bitcoin Association of Hong Kong, believes the solution for the drug and food safety problem is not blockchain, but other decentralized and transparent systems, which are far cheaper and faster.

“Blockchains are slow and expensive. The amount of data that can be stored in them is minuscule. Instead, we should first figure out how to put it in a computer, then on the internet, and only then should we start talking about blockchains.”

Supply chain is a top priority for blockchain disruption. Recent projects include the G Coin, which aims to track the gold supply chain, and Coca-Cola‘s attempt to end forced labor.

Featured image from Shutterstock.

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Chinese Research Institute Report Finds Blockchain Can Enhance Financial Services

A Chinese scientific research institute and value-added Internet service provider Tencent Holdings have jointly released a July 24 report emphasizing the impact of blockchain on the transformation of traditional financial services.

The Academy of Information and Communications Technology, a scientific research institute under China’s Ministry of Industry and Information Technology (MIIT), and China’s Tencent Holdings’ report includes eight core conclusions of blockchain implementation in the financial sector.

According to the report, blockchain technology will further enhance “the transparency of financial transactions, strengthen the flexibility of system operation, and automate processes, thus affecting the record keeping, accounting and payment settlement methods of financial services. The study further comments:

“In addition to digital currency, the characteristics of the blockchain can play a big role in the fields of payment and settlement, supply chain finance, securities trading, insurance, and credit reporting.”

During the process of applying blockchain, the report notes, it is necessary to differentiate between the “coin” application and the “chain” application, presumably a reference to blockchain tech’s basis for most cryptocurrencies:

“For the ‘coin’ application, the financial risk should be strictly guarded. For the ‘chain’ application, it should be legally regulated.”

Earlier this week, three major Chinese telecom operators launched a blockchain research group for building a “next-generation telecommunication network.” China will also lead an international research group on the standardization of the Internet of Things (IoT) and blockchain technology, as Cointelegraph reported July 18.

China has also recently downplayed blockchain tech, as the head of the international department of the China Banking and Insurance Regulatory Commission warned against “mythologizing” blockchain technology in mid-July.

As China was the first country to institute blanket a ban on Initial Coin Offerings (ICO) and exchanges, Cointelegraph reports that the country has some difficulties with the decentralized and liberal freedoms that comes from blockchain and cryptocurrencies.

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Chinese City of Nanjing Launches $1.5 Billion Fund for Local Blockchain Projects

Nanjing, the capital of China’s Jiangsu province, has launched a 10 billion yuan ($1.48 billion) investment fund for blockchain development, ZDNet reports July 23.

Nanjing unveiled the major new fund at the inaugural Industrial Public Chain Summit (IPCS), together with the Zhongguancun Blockchain Industry Alliance –– a Beijing-based alliance of enterprises and government research institutes.

Among the high-level regional government officials reportedly in attendance at ICPS was the deputy secretary of the Communist Party of China in Nanjing, Luo Qun.

Oh Kap-soo, chairman of the South Korean government-backed research institute Global Finance Society, was also at the summit and advocated for the two countries’ collaboration to foster technological innovation.

As part of the initiative, Nanjing will reportedly encourage and assist blockchain companies to establish a base in the city. ZDNet cites blockchain asset management startup UDAP Foundation as an early beneficiary of the fund.

Wang Xiaohui, deputy chairman of Tsinghua University’s Internet Industry Research Center, spoke at the summit of the need for global cooperation, industry integration, consensus, and autonomy to ensure the future success of a tokenized economy.

Blockchain is rapidly making inroads at all levels of Chinese government, with another major government-backed blockchain fund unveiled in the city of Hangzhou this April.

Bolstered by president Xi Jinping’s public endorsement of the the technology this spring, China’s IT Ministry has been the latest government body to embrace innovation, with its deputy director this month advocating for an “industrial” scale adoption of blockchain across all areas of the economy and society.

The People’s Bank of China (PBoC) has meanwhile been exploring blockchain integration, last month filing a new patent for a digital currency wallet, as well as for a blockchain-powered system designed to tokenize paper checks.

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Chinese Region to Shut Down 'Illegal' Bitcoin Miners By September

China’s Xinjiang Uyghur autonomous region is set to eliminate “illegal” bitcoin mining operations by the end of August, a government agency has confirmed to CoinDesk.

Rumors first emerged online over the weekend after the leak of a government notice issued by Xinjiang’s Economic and Information Commission (EIC) indicating the authority was demanding that local utility companies report and shut down illegal bitcoin mining operations.

An official from the commission – a local government agency focused on technological development – confirmed the authenticity of the document to CoinDesk on Monday, saying it was drafted by the EIC’s unit in charge of the region’s utility issues. No further comments were provided.

According to the document’s definition, illegal bitcoin miners refers to any operation that is not registered with the government as a licensed business entity or has been using electricity without formal contracts with utility firms.

It further states that utility companies in the region are now tasked with the mission of shutting down such unlicensed operations and reporting back to the authority on their progress by the end of August.

“Local utility agencies and companies will be held accountable if they failed to shut down ‘illegal’ bitcoin mining operations,” the EIC writes.

The effort follows a notice issued in January that required Xinjiang’s utility companies to make regular reports to the authority on local bitcoin activities as part of a wider move to eventually guide these entities to an “orderly exit” of the business in the region and nationwide.

That crackdown has already affected miners operating farms in Xinjiang. Scott Meng, the chief executive of a Canadian blockchain startup who also jointly owns mining farms in the region, told CoinDesk that the government’s notice early this year “definitely had impact” on bitcoin mining operations.

He said:

“I have two partners (in the region): one has 18,000 crypto miners, the other has 40,000. And they have been crying for help in the past days, urging me to look for places in the U.S. and Canada (as substitutes). But even for me, I have to get electricity first. And even if I had that, we need to build farms from scratch.”

In June 2017, the EIC also issued a notice to municipal governments asking them to be careful when supporting bitcoin mining companies.

“These operations contribute nothing to the region’s economy besides consuming a spiking volume of electricity,” the EIC said at the time.

Those orders were issued at a time when bitcoin miners were increasingly looking to the cheap electricity and vast land resources available in regions like Xinjiang as means of boosting their operational profits.

For instance, in November 2016, Bitmain notably announced a plan to build a datacenter for bitcoin mining in Xinjiang. The firm declined to confirm to CoinDesk for this article if it is still operating any mining farms in the region.

Tian Chuan contributed reporting. 

Electricity pylons in Xinjiang image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Chinese City Starts a $1.5 Billion Fund to Promote Public Blockchain Projects


Nanjing, Jiangsu’s capital, is committed to investing in public blockchain projects and overall token economy. The capital of this Chinese province put together a 10 billion yuan ($1.5 billion) fund in a blockchain investment fund.

A Beijing-based alliance, Zhongguancun Blockchain Industry Alliance, is teaming up with Nanjing City to launch this blockchain investment fund of $1.5 billion. The alliance, formed by government research institutes and blockchain companies, revealed the bold initiative at the first Industrial Public Chain Summit (IPCS). Among the high-level government official attendees, there was the Deputy Secretary of the Communist Party of China, Luo Qun.

Finally Ready to Embrace the Sector?

China has had a somewhat interesting approach to cryptocurrencies and blockchain technology over the years. Just less than a year ago, China banned all ICOs and recently reaffirmed its stance by pledging to go after the so-called foreign ICOs.

However, earlier this year the country ranked several existing cryptocurrencies — Bitcoin didn’t even make it to the top 10, — and it has recently registered an increase of 454% in companies including ‘blockchain’ in its name.

Now a Chinese official authority is working alongside a blockchain alliance to develop the local token economy and public blockchain projects. While the country might have been extremist at the beginning, it certainly is changing its approach to the cryptocurrency world.

Two Projects Have Been Selected For The Blockchain Fund

The UDAP Foundation and TokenX Community are reportedly the first recipients of the fund. UDAP is aiming to build a decentralized asset platform in which users can tokenize assets, and TokenX Community’s goal remains a mystery, at this point.

Not only is Nanjing City planning on fund blockchain projects, it’s also planning on having these companies moving their location to its territory. China is already the world leader in the number of blockchain-related patents filled — 225 last year, followed by the U.S. with 91.

The Convergence of Blockchain Technology With Industries

The Chairman of Zhongguancun Blockchain Industry Alliance, Yuandao, believes as industries adopt blockchain technology and more chains are created, more technological breakthroughs will come along, too.

At the event, the Deputy Chairman of Tsinghua University’s Internet Industry Research Center, Wang Xiaohui, agreed that merging blockchain technology with industries, among consensus, global cooperation, and autonomy, will be the pillars of a healthy and successful token economy.

Nanjing city skyscape image from Shutterstock.

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Bitcoin Mining Firms Make Chinese Unicorns List for First Time

Three bitcoin mining companies have joined a list of “unicorns” – private companies valued at over $1 billion – for the first time.

The Shanghai-based Hurun Research Institute published its Q2 Unicorn Index for the Greater China region on Wednesday, which notably included the names of several major bitcoin mining firms: Bitmain, Canaan Creative and Ebang. The third Hurun list of 130 Chinese unicorns has never before featured a fully cryptocurrency-focused firm.

Ranking highest of the three, Bitmain appears at 13th on the list with a valuation of around 70 billion yuan, or about $10.4 billion, close to other notable companies such as JD Logistics.

The ranking follows recent news indicating that Bitmain has completed a Series B round funding that could value the firm around $10 billion ahead of a potential initial public offering (IPO).

Meanwhile, Hurun values Canaan and Ebang at around $3 billion and $1.5 billion, respectively – figures that saw the firms placed at at 32nd and 53rd on the list, also respectively.

Recent reports have indicated that Canaan and Ebang too have both filed applications to go public on the Hong Kong Stock Exchange. However, since the IPO applications were in initial draft form, it is unclear how much the two were seeking to raise or what their valuations might be. According to a previous report from Reuters, in mid-2017, Canaan was estimated to be worth around $500 million.

While the three are the first fully devoted bitcoin firms to appear on the Greater China Unicorn Index, some of the companies already on the list have already made major moves in the blockchain industry.

For instance, Ant Financial – a payment affiliate of Alibaba that tops the list with a valuation of $149 billion – announced late last month that it has launched a blockchain-powered payment corridor between Hong Kong and the Philippines.

Further, OneConnect – a fintech development arm of Chinese insurance giant PingAn and valued at $7.4 billion – has helped the Hong Kong Monetary Authority engineer a blockchain trade finance platform that is set to go live by September.

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The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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