​Chinese police seal the office of the issuer of the CNHC and HKDC stablecoins

What’s new? Shanghai police have detained employees of Trust Reserve (formerly CNHC Group), which issues CNHC and HKDС stablecoins pegged to the offshore yuan and Hong Kong dollar, respectively. Journalists of the local publication PANews, who visited the issuer’s office in the Pudong district on May 31, reported that it had been sealed off by law enforcement two days ago when the team stopped communicating. The authorities also notified the families of individual employees. According to PANews, the investigation may not be related to the issuance of stablecoins, but rather to the company’s cross-border payment business.

PANews’ material

Details about the company. Trust Reserve completed an A+ funding round in March this year, raising $10 million from the venture arm of crypto exchange KuCoin, stablecoin issuer USDC Circle and Chinese investment firm IDG Capital. Journalists note that Trust Reserve has not actually developed its stablecoin business.

According to analyst Colin Wu, the company has also been facilitating cross-border payments for a long time, transferring US dollars to offshore and then converting to onshore yuan, with a cumulative transaction volume of $15 billion. The litigation may relate to the sources of funds provided by Trust Reserve customers for conversion.

CNHC and HKDC are issued on the Ethereum and Conflux blockchains. The latter has been supported by the Shanghai authorities as compliant with the PRC’s law. In addition, in July 2021, Trust Reserve began collaborating with Conflux to make payments in offshore yuan on the blockchain. The network’s native token CFX collapsed by 9,3 % overnight amid news of the detention and is trading at $0,286466 as of May 31, at 11:20 UTC, according to CoinGecko.

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