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Jerry Yu studies at New York University, is 23 years old and is one of many Chinese citizens residing in the United States. So far nothing strange. Over the last few days, however, Yu has made a good number of headlines in the international media and has become – surely to his chagrin – the most visible face of a controversial practice: the tricks used by Chinese citizens to move money to The US circumventing the surveillance of both countries.
The reason: despite his young age, Yu is the majority owner of a Texas Bitcoin mine acquired last year for more than six million dollars.
Student and wealthy (crypto)miner. The case of Jerry Yu has been revealed by The New York Times and draws attention both for its details and, above all, for what it shows us. After all, as the New York newspaper recalls, it is an example of how Chinese citizens can transfer money from China to the United States, avoiding the radar of the authorities of the two countries.
Yu is a 23-year-old Chinese citizen who studies at NYU, trained in Connecticut and lives in an apartment purchased for $8 million from Jeffrey R. Immelt, former director of General Electric. For his countrymen he represents what they usually call "a rich second generation." If he has risen to fame, however, it is for another facet: that of the owner of a Bitcoin mine in Texas.
A six million mine. Theirs is not just any exploitation. Yu is the majority owner of a Bitcoin mine located in Texas and which was acquired last year after paying six million dollars. The payment was not made, however, with the official US currency, but with cryptocurrencies. The transaction was carried out through a means that offers anonymity and an extraterritorial exchange that, TNYT recalls, makes it difficult to know the origin of the financing.
Yu's company is called BitRush Inc, or BytesRush, and its mine is located in Channing, a small town in the Panhandle, Texas, with less than 300 inhabitants. There, in an open field, are located dozens of buildings equipped with 6,000 computers dedicated to mining Bitcoins.
Contractor complaints. Yu's business might have gone unnoticed if it weren't for complaints from Channing's contractors that they haven't been paid for all of his work. The lawsuits have focused the spotlight on crypto mining and brought to light transactions that normally do not come to light.
In one of the lawsuits that implicates Yu, Crypton Mining Solutions assures that the investors in the mine "are not only Chinese citizens" and that behind it there are also "citizens with very influential political and business positions", but there is no evidence of such links and the money trail leads to Binance.
Yu's investors used a cryptocurrency called Tether, which, added to the routing through the BINANCE offshore exchange, makes it impossible to know the origin of the capital. TNYT goes further and assures that when the transaction was made, Binance's offshore operations did not comply with US banking regulations. At the end of November, the company's until then executive director, Changpeng Zhao, left his position for not having adopted measures to prevent money laundering. The firm also agreed to pay a fine of 4.3 million.
Because it is important? If the case of Yu and BitRush is interesting, it is not only because of its details and sums. Without intending to, Yu has become an example of how Chinese citizens can move money from their country to the United States, circumventing the control of the authorities of both nations and evading the scrutiny that a typical transaction would entail, with a bank that would know the origin of the funds and would inform the Treasury of suspicious activities.
How? Thanks to a system that offers them anonymity and makes it difficult to find out the origin of the funds, Chinese investors manage to avoid the control of the American banking system and the scrutiny of federal regulators. Also the restrictions on the outflow of funds from China itself, which in 2021 intensified its campaign against cryptocurrencies and even declared transactions and mining of this type of currency illegal. The mines allow them to generate cryptocurrencies, especially Bitcoins, and then exchange them for US dollars.
