Source: AdobeStock / LIGHTFIELD STUDIOS
Jerry Yu is a 23-year-old student at New York University. He’s also the majority owner of a Bitcoin (BTC) mining farm in the US, fighting legal battles and various allegations.
Yu, a Chinese national and US resident, is what the Chinese call second-generation rich, The New York Times reported. The authors described him as,
“A case study in how Chinese nationals can move money from China to the United States without drawing the attention of authorities in either country.”
The student lives in Manhattan in an $8 million condominium.
Outside the university, Yu is the majority owner of BitRush Inc., aka BytesRush.
The mine was acquired last year for more than $6 million. It is located on an open field next to an electrical substation in a small Texas town called Channing, with less than 300 residents.
The facility features “several dozen” buildings that hold the equipment. To be precise, they house 6,000 miners operating non-stop.
Lawsuits Lead to Scrutiny
The mining facility wasn’t bought with dollars, but with crypto. Regulators tend to find issues with this type of anonymity as they have trouble tracing funds.
The Times noted that it enables Chinese investors to avoid the US banking system and federal regulators. At the same time, they can evade Chinese restrictions on taking money out of the country.
Furthermore, China has enacted a full ban on crypto back in 2021. This has led investors and miners to move to the US. This further resulted in security questions related to Chinese ownership and investors, as discussed below.
The facility purchase got into focus following a number of lawsuits filed by contractors, claiming they were not fully paid.
Panhandle Line Service is an electrical contractor involved in a suit and countersuit with BitRush over payments.
In another lawsuit, Texas-based Crypton Mining Solutions claimed that the Channing mine investors “are not only Chinese citizens, but citizens in highly political and influential business positions.” It did not have the evidence to back this up, though.
Crypton’s lawyer David Huang shared documents with The Times, identifying some BitRush shareholders. The names included an investor from IMO Ventures, a China-focused venture capital firm in California.
Additionally, Yu Hao and Sun Xiaoying are two people who signed the mortgage documents for Yu’s Manhattan apartment. These are the names of a Chinese couple who own stakes in companies worth more than $100 million, the report said. A person named Sun Xiaoying is also listed as a BitRush director.
Gavin Clarkson, a lawyer for BitRush, would not confirm BitRush shareholders’ identities or Yu’s possible connection to them, The Times said.
Clarkson further stated that Crypton’s claims are “baseless and without merit.” It’s Crypton that owns money to BitRush, he added. A lawsuit against Crypton seeks $750,000 in damages.
‘Only Binance Knows’
Crypton’s lawyer, David Huang, shared documents with The Times, detailing the mine purchase plan.
Outlaw Mining, the seller, would receive $500,000 in USDT as a deposit, followed by $6.33 million. BitRush would pay 750,000 USDT after taking over the site.
But what is troubling regulators is that the funds’ source is not publicly recorded. Only crypto exchange Binance knows it, as it handled the transaction. Meanwhile, Binance is facing its own major regulatory scrutiny.
Lawyer Clarkson said that BitRush itself never sent or received any money through Binance.
Jessica Jung, a Binance spokeswoman, said that crypto wallets from three Binance accounts sent the USDT payments. All of them belonged to foreign nationals and not US residents.
Clarkson added that the company “complies with all required federal, state and local laws and regulations, including banking laws and regulations.”
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