Bitfinex shareholder and ‘OTC king’ in Chinese court on criminal charges, docs

Bitfinex shareholder and OTC king Zhao Dong is facing a criminal trial this week on charges similar to money laundering.

Crypto exchange operator Zhao Dong — also known as China’s over-the-counter (OTC) king — is facing criminal charges this week analogous to money laundering, court docs show.

Zhao, who local crypto denizens call “Uncle Dong,” will front Hangzhou court Wednesday on allegations of operating an illegal business and aiding a network of criminal activity.

Protos understands the former charge is similar to operating an illegal money services business in the US, and the latter akin to money laundering.

  • Zhao runs RenrenBit, an OTC crypto trading desk and digital asset lender. 
  • Chinese authorities restricted crypto exchanges in 2017.
  • OTC desks like Zhao’s have operated in a legal gray area ever since.
Simpler times: ‘Uncle Dong’ giving JP Morgan the bird in 2017.

OTC king was arrested after all

Zhao is well-known in China but achieved overseas notoriety after his first ever tweet announced Bitfinex’ $1 billion token sale for UNUS SED LEO in 2019, a move Zhao reportedly suggested.

Zhao is a Bitfinex shareholder but how large their stake is unclear. One article quoted Bitfinex CTO Paolo Ardoino, who said Zhao’s stake is under 5%.

Zhao was also behind Tether’s yuan-backed stablecoin CNHT, which currently has about $3 million in circulation. However, there hasn’t been a CNHT transaction in 70 days.

In any case, RenrenBit’s founder made headlines last year when rumors spread that Chinese police had detained him for questioning.

Authorities froze 4,000 accounts tied to OTC crypto trades in a crackdown on the local industry around the same time.

RenrenBit later claimed Zhao’s run-in had nothing to do with the company, and instead related to a side business.

But Zhejiang court documents filed last Friday name over a dozen defendants in an apparent money laundering case — including Dong.

They also report Zhao was “taken away by police” on June 19 last year.

A new boss for Renrenbit

It’s worth noting that Zhao’s charges are criminal, not civil, which means he could receive years behind bars.

Indeed, the likelihood the ‘OTC king’ walks away without a massive penalty — and a prison sentence — are about zero, with the odds of guilty convictions in China almost 100%.

Information of OTC king Zhao’s trial was shared on Weibo.

[Read more: Here’s what Tether and Bitfinex must submit to NYAG in May]

A RenrenBit spokesperson confirmed Zhao no longer serves as chief exec, telling Protos the company has a new boss.

When asked about the impact of Zhao’s trial, the spokesperson explained security of company funds has been “fully considered” and “adequate protection measures have been taken.”

“The funds of the platform will not be affected by personal incidents,” said the RenrenBit rep. “Please, please rest assured.”

Edit 17:44 UTC, May 10: Corrected CNHT circulating supply in paragraph 7.

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