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Chinese authorities dismantle another cryptocurrency initiative
Following an inquiry by Chinese police, funds have gone missing from the liquid staking plan of Filecoin known as STFIL.
“There are suspicions that the primary technical team of STFIL is being investigated by local Chinese law enforcement,” revealed STFIL developers in a tweet on April 9, “Legal professionals have been engaged to analyze the current circumstances and offer legal representation to the persons in custody.”
Despite the reassurances given, Filecoin staked by users on STFIL was transferred to an undisclosed location while the project’s personnel were held, coinciding with various unexpected updates. Data from the blockchain indicates that more than 4.3 million FIL tokens, valued at approximately $40 million currently, were moved to an unknown wallet.
Concurrently, information from DeFi Llamashows a decline in the overall value locked in the protocol from $95 million to $55 million within the last month. Chinese law enforcement typically investigates cryptocurrency initiatives they suspect of involvement in illicit activities such as money laundering or fraudulent transactions.
Prior to its downfall, STFIL was offering a yearly yield of up to 9% to users who staked their Filecoin and obtained returns from their locked funds. At the time of the incident, the STFIL platform was the second-largest in terms of Filecoin staking, boasting approximately 2,500 participants.
This is not the first instance where Chinese authorities have intervened in a Filecoin venture. Back in November 2021, a $55 million Filecoin mining setup was seized by the Chinese government on charges of running a pyramid scheme and engaging in money laundering.
Over the past year, Chinese regulators have intensified their crackdown on crypto ventures operating within their jurisdiction, often adversely impacting international users of such platforms. Last year, the cross-chain bridge Multichain was shut down following the detainment of its…
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