Chinese authorities have launched an inquiry into the primary technical team overseeing the STFIL Protocol, a notable decentralized finance (DeFi) platform operating on the Filecoin network. The investigation was prompted by the transfer of a substantial amount of Filecoin tokens to an unknown address, currently holding approximately $23 million worth of FIL.
STFIL Protocol’s Core Technical Team Subject to Chinese Police Investigation: Filecoin Token Transfer to External Wallet
In a statement released on X, STFIL revealed that members of its core technical team are currently under scrutiny by local law enforcement. The platform has enlisted legal counsel to navigate the situation and provide support to the detained individuals.
Reports indicate that the investigation intensified following the movement of FIL tokens from the STFIL platform to an external wallet. This transfer, amounting to 2.5 million FIL tokens valued at $22 million, coincided with the detention of key technical team members. The transaction occurred alongside an unexpected protocol update, described by the team as “unusual.”
In response, STFIL is actively soliciting community assistance to trace the unknown address and discuss strategies to protect stakeholder interests.
STFIL functions as a liquid staking platform on Filecoin, allowing users to earn staking rewards on their FIL tokens while leveraging them in DeFi activities by receiving liquid staking tokens (LSTs) in return for their deposits. However, the platform’s total value locked has experienced a significant decline, plummeting by nearly 60% since the start of April to $40 million.
Community members on X, who claim to have staked their FIL tokens on the platform, are deliberating potential avenues to recover their funds. Questions have arisen regarding the legality of authorities seizing assets.
Despite these challenges, the Filecoin token has demonstrated resilience, reaching a seven-day high of $9.32 on April 9, with a 24-hour trading volume of $265 million. Presently, the token is trading at around $9.12, as per data from CoinGecko.
Chinese Authorities Target Filecoin Ecosystem Amidst Heightened Crypto Regulations The STFIL incident follows previous legal actions by Chinese authorities against entities involved in the Filecoin ecosystem. Notably, in August, a local Filecoin mining firm and its executives faced charges related to an alleged $83.3 million pyramid scheme. Additionally, in 2021, authorities seized $62 million from a Filecoin miner.
China, while promoting blockchain initiatives, has concurrently tightened its grip on the crypto industry, beginning with the closure of Chinese Bitcoin exchanges in 2017. Despite the ban on crypto trading, a significant portion of Chinese investors, accounting for 33.3%, holds substantial amounts of stablecoins, ranking second only to Vietnam.
Responding to calls for enhanced regulatory oversight, China is preparing a substantial amendment to its Anti-Money Laundering (AML) regulations to encompass cryptocurrency transactions. This revision, the first since 2007, aims to impose stricter guidelines to combat crypto-related money laundering.