China arrests stablecoin developers

The CNHC and HKDC stablecoin development team working for Trust Reserve has been detained by Chinese police, according to PANews. On May 29, the employees stopped communicating, and now it became known that they were under detention, and their families were notified by the police.

Trust Reserve, formerly known as the CNHC Group, issued the CNHC stablecoin, pegged to the offshore yuan (CNH), and HKDC, pegged to the Hong Kong dollar.

In March, the company announced the completion of a $10 million Series A+ funding round. Investors included the venture arm of the KuCoin crypto exchange, Circle, the issuer of the second-largest stablecoin USDC, and Beijing-headquartered investment firm IDG Capital.

The offshore yuan (CNH) is used outside of mainland China, while the yuan (CNY) is used within China. The CNY is controlled by the People's Bank of China, while the CNH is regulated by the Hong Kong Monetary Authority. The CNH rate is more flexible and fluctuates depending on the volume of purchases and sales in the international currency market.

Trust Reserve tokens have been issued on the Ethereum and Conflux blockchains. The Conflux project, which received support from the Chinese government, announced a strategic partnership with Trust Reserve in 2021. After the news about the detention of Trust Reserve employees, the rate of the native Conflux token (CFX) decreased by 7%, from $0.312 to $0.289.