Chinese police have reportedly arrested and detained some employees of Trust Reserve, the company behind the yuan-backed stablecoin CNHC.
According to a report from local media PANews, the main team of the Trust Reserve were apprehended at noon on May 29, and their family members were notified.
Police arrest CNHC rescue team
Representatives from PANews visited the company’s offices in Pudong, Shanghai, and found a vacant workspace with a seal reading “Legal Seizure, Strictly No Vandalism” on the door. The notice was signed on May 29.
Although the reason for the arrest is unclear, people familiar with the matter told the local news agency that Trust Reserve’s cross-border payment business may be behind the case.
Trust Reserve has two stablecoins – an offshore asset backed by the Chinese yuan (CNHC) and a token backed by the Hong Kong dollar (HKDC). The stablecoin issuer recently secured $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.
CNHC, backed by permissionless layer-1 blockchain network Conflux, is pegged 1:1 to the offshore yuan (CNH), whose reserves are held in a Hong Kong depository institution.
Fear and uncertainty
News of the arrest comes amid unverified rumors that Chinese authorities have arrested the Multichain project team. Multichain is a cross-chain router protocol with over $1 billion in assets locked into its contract.
Over the past week, transactions on the protocol have been delayed and stalled with several offline cross-chain bridge lanes, including Polygon zxEVM, Kava, and zkSync. The team initially stated that the issue stemmed from a backend upgrade, which is taking longer than expected. However, the narrative was later changed to issues resulting from uncontrollable events.
The Multichain team has failed to confirm or refute the ongoing rumors and have remained silent on social media platforms including their Telegram group and Discord server.
On May 25, Multichain co-founder DJ Qian, who is no longer working with the project, disclosed on Twitter that the current CEO, Zhaojun, was unavailable when asked to provide technical assistance for the ongoing issue.
Sudden demise of Multichain and Trust Reserve teams may cause fear and uncertainty among their users, causing panic selling of their products.
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