Zhao Dong: The Final Word

Despite repeatedly requesting cryptocurrency media cover the Zhao Dong story more thoroughly, not a single one has decided to follow through — even though many outlets have correspondents in China.

If you have no idea who Zhao Dong is, please read the other pieces I’ve written about him and his cryptocurrency exchange and lending site, RenRenBit. You can view those articles here and here. This article will make zero sense if you don’t have a thorough understanding of who Zhao Dong is and why he matters.

“When the Going Gets Tough, the Tough Get F*cked”

Scrolling through the annals of cryptocurrency past, I stumbled upon an interesting article from 2017 entitled Two Brothers Arrested in Bitcoin Laundering Scheme, featured in Flanders Today (a small newspaper that covers the Flanders region of Belgium).

The stunning piece of trivia within this short piece was that those laundering Bitcoins in 2017 in Belgium were, apparently, laundering on behalf of Zhao Dong. Here’s the best bit:

via Flanders Today

But nothing happened to Zhao Dong in 2017. Or 2018. Or 2019. He remained unscathed by the claims and boldly explained that he wasn’t worried, one way or another.

Zhao Dong won’t spend three decades behind bars, but he’s almost certainly sitting behind bars now.

The difference between bold and stupid is a fine line.

While Zhao Dong’s contemporaries have fled the Mainland (CZ, founder and CEO of Binance, left ages ago, Justin Sun, creator of TRON, resides in San Francisco, and BitMex and Bitfinex are obviously located in Hong Kong for a reason), Zhao Dong flagrantly exposed himself to the risks of regulators catching up with his arbitrage play. And catch him they did.

He’s Hard To Find, Oh Well, Whatever, Never Mind

The majority of the cryptocurrency space either willfully ignored Zhao Dong’s disappearance months ago or purposefully stayed silent. Why though?

Well, because Zhao Dong is an important part of the Bitcoin and cryptocurrency OTC market in China and his disappearance is troubling, to say the least. Not to mention that almost immediately after he disappeared many Bitcoin and alternative coin miners in China were shutdown or had their energy subsidies completely wiped out.

“Chalk it up to the normal China FUD.” Or, maybe, don’t. I’ve said it before and I’ll say it again: China doesn’t f*ck around.

However, rather than ask questions about their comrade-in-arms, the one who helped save Tether, the one who supported Bitfinex and the cryptocurrency space-at-large for years, his “friends” have remained mum. And I think it’s because his disappearance and (likely) arrest freaked them out.

It’s Just a Little Money Laundering, It’s Still Good, It’s Still Good!

Okay, we have an idea of who Zhao Dong is, why he matters, why his friends aren’t coming to his aid, but is there a conclusion here? Sorta.

I’ve never been detained or arrested in China and know very little about the inner-workings of the Chinese legal system. But people in China have expressed that, generally, law enforcement will “detain” (not arrest!) an individual for anywhere between two and three weeks, maximum. After these 14–21 days, you can bet your bottom dollar that the person is being held behind bars and will either be tried (and almost 100% found guilty) in some public fashion, or has already been sentenced. There’s a good chance he sees prison time or “re-education camp” time — alternatively he may just be heavily fined and released.

Anyhow, the likelihood we hear from Zhao Dong anytime soon is… slim.

The last time Zhao Dong was seen on Telegram, Twitter, WeChat or Weibo: a long time ago.

Even the Chinese rumor mill has slowed down, though the last word through the grapevine was as follows:

Meanwhile, RenRenBit’s Telegram, while largely free from customer complaints, is deadly quiet, and the token the exchange issued has… seen better days:

Price chart for RenRenBit token from beginning-to-current time, via CoinGecko.

The relevancy of one of China’s largest OTC traders may, more or less, be over. His exchange isn’t mentioned, the community has deliberately forgotten about him, and the money he contributed to the space may as well be considered a generous donation. Thanks, Uncle!

Actions Speak Louder Than Words

This seems like an apt time to make sure other OTC traders and cryptocurrency proponents in China understand the risks involved with the game they’re playing. This might be an absurd lesson, but I truly believe Zhao Dong’s biggest mistake was returning to Chinese soil — if he’d stayed in Japan (or perhaps further afield) I wouldn’t be writing this article today.

I truly hope that the people utilizing cryptocurrencies and performing OTC trades in China do so in such a way that either (a) doesn’t break the law or (and this is the more important one) (b) doesn’t make it easy for them to get caught breaking the law. Zhao Dong, apparently, did neither of these things. If you aren’t extremely careful, the Chinese Communist Party will catch you, and they will absolutely, one hundred and fifty percent wreck your life — and that’s not me endorsing the CCP, that’s me saying don’t be a moron if you’re money laundering in China.

Don’t Hate the Player

I don’t hate Zhao Dong.

Despite being one of the loudest critics of RenRenBit, Zhao Dong, Bitfinex, and Tether, I don’t wish Zhao Dong’s consequences on anyone in the world. Being held in captivity, without access to the outside world, without being able to explain the circumstances to your business partners, customers, friends, and family, is terrifying and horrendous. While I often spar with people whom I disagree with, it’s fair to say that wishing torture on them is a step too far.

I hope that Zhao Dong is okay. I hope actual justice is administered and any crimes he may have committed are announced publicly. I hope that others take some meaningful lesson away from all of this. I hope this is the last time that a critic of a financial schemer has to be the one worrying about his detention.

I hope you all stay skeptical, friends.

Fraud. Fraud everywhere.