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Chinese Police Apprehend Group Behind Yuan-Backed CNHC Stablecoin

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The Chinese police have arrested and detained the employees of Trust Reserve, the firm behind the Yuan-backed CNHC stablecoin.

According to a local news outlet report, the core team of Trust Reserve was arrested on the afternoon of May 29, and notification was sent to their family members.

Trust Reserve issues 2 stablecoins, CNHC and HKDC. While the Chinese Yuan backs the former, the latter is backed by the Hong Kong dollar.

In the first quarter of this year, KuCoin secured $10 million in funding for CNHC via a funding round that KuCoin Ventures led.

Other participants in the funding round were Circle Ventures and IDG Capital.

Circle Ventures is the investment section of USDC stablecoin issuer Circle, while IDG Capital is a multi-national investment company.

CNHC is backed by Conflux, a permissionless layer 1 network and is pegged 1:1 with CNH (offshore Yuan) held at a Hong Kong depository institution.

CNHC Core Team Arrest

According to those familiar with the matter, representatives were sent to the firm’s office in Pudong, Shanghai and located an empty space with a seal that read “Judicial Seizure, Strictly No Vandalism” on the door.

Moreover, the signature on the notice says May 29, and the reason for the arrest is still unclear.

However, those close to the case told the local news outlet that the arrest might be due to Trust Reserve’s cross-border payment business.

How is the Company Handling the Matter?

Currently, the Multichain team hasn’t confirmed or denied the spreading rumours.

Also, they maintained silence even on social media outlets which include; Discord server and their Telegram group.

The unexpected vanishing of the Multichain and Reserve teams may flare up uncertainty and fear among their users, leading to panic sales of the products.

Meanwhile, on May 25, the co-founder of Multichain, DJ Qian, who no longer works on the project, was asked to offer technical assistance.

But he revealed that Zhaojun, the present CEO, was unavailable.

Since last week, the transaction on the platform has been delayed.

Thus, they are stuck with several offline cross-chain bridge pathways, such as; Polygon zxEVM, zkSync, and Kava.

At first, the team said the problem came due to a backend upgrade taking more time than expected.

But later, the statement changed to uncontrollable events as the cause.

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