Chinese police detain team behind yuan-backed CNHC stablecoin: report

Chinese police have arrested and detained some employees of Trust Reserve, the company behind the yuan-backed CNHC stablecoin.

according to a reports From local media PANews, the core team of Trust Reserve was apprehended in the afternoon of May 29, and their family members have been informed.

Police arrested the team that issued the CNHC

PANews representatives visited the company’s office in Pudong, Shanghai, and found an empty workspace with a seal on the door reading “Judicial seizure, strictly no vandalism”. The notice was signed on 29 May.

While the reason for the arrest is unclear, people familiar with the matter told a local news agency that Trust Reserve’s cross-border payments business may have been the cause.

Trust Reserve has two stablecoins – an offshore Chinese yuan-backed asset (CNHC) and a Hong Kong dollar-backed token (HKDC). The stablecoin issuer recently raised $10 million for CNHC in a funding round led by KuCoin Ventures, the investment arm of Seychelles-based cryptocurrency exchange KuCoin.

Circle Ventures, the investment division of USDC stablecoin issuer Circle, and multinational investment firm IDG Capital also participated in the round.

The CNHC, powered by the permissionless layer 1 blockchain network Conflux, is pegged 1:1 to the offshore yuan (CNH), whose reserves are held at the Hong Kong Depository Institution.

fear and uncertainty

The news of the arrest comes amid unverified rumors of Chinese authorities allegedly arresting the MultiChain project team. MultiChain is a cross-chain router protocol with over $1 billion in assets locked in contracts.

Over the past week, transactions on the protocol have been delayed and Polygon has been stuck with several offline cross-chain bridge pathways, including zxEVM, Kava, and zkSync. The team initially said that the problem was with the backend upgrade, which was taking longer than expected. However, the narrative is later changed to problems stemming from uncontrollable events.

The Multichain team has failed to confirm or deny the ongoing rumors and has remained silent on social media platforms including its Telegram group and Discord server.

On May 25, Multichain co-founder DJ Qian, who no longer works with the project, exposure on Twitter that the current CEO, Zhaojun, was unavailable when asked to provide technical support for the ongoing issue.

The sudden disappearance of the Multichain and Trust Reserve teams could spread fear and uncertainty among their users, leading to panic buying of their products.