In the midst of a scandal involving a major partner of the Xiong’an Global Blockchain Innovation Fund, a local news report that claimed the local government will be withdrawing its financial support has been denied by the fund.

Venture capital for blockchain

The fund is one of the largest of its kind in China as the country ramps up its support of blockchain initiatives, businesses, smart-cities and other blockchain related industry and institutions.

Worth USD 1.6 billion, part of the venture capital fund is coming from Tunlan Investment, a Hangzhou firm; 30% (USD 400 million) is being provided by the Hangzhou city government.

Government withdrawal

The report was published by the China Business Journal on 26 July and stated that the Hangzhou city government was demanding the fund to stop publicizing itself as a government-backed fund.

The piece refers to an “informed person close to Li Xiaolai” who made indications that governments decision withdraw came down to the aforementioned scandal, which have had negative impacts on the company and city government.

Cause for speculation

Conflict soon erupted when a public feud between Bitcoin advocate Xiaolai and venture capitalist Chen Weixing eventually led to Li’s resignation from the Xiong’an Blockchain Innovation fund, of which he was the managing partner.

Weixing accused Li of being a “fraud” and branded him “a tumor” of the industry, going so far as to accuse the Bitcoin evangelist of owing BTC 30,000 to a group of investors, a debt of which allegedly dates back to 2013.

After a period of back-and-forth responses from the pair, an audio recording from a private meeting that took place in January 2018 was leaked in July. In the leak, Xiaolai made brash comments against companies such as NEO, Ripple and Binance, which he called a “scam”. In early July, Li resigned.

Funding “not suspended”

Though the China Business Journal report had made a response denying that the Xiong’an fund was suspended, he also offered further clarification to CoinDesk that the government had not presently withdrawn or pulled out of future funding.

On 26 July, the fund also issued a statement, further denying the report saying, “There are many false reports on the report that “Xiong Fund is suspected of being stopped by the government for propaganda and investment.” Xiong’an Fund has not received any relevant notice from the government.”

Additionally, the fund says that it will continue with its original intentions, and will retain its right to “pursue legal liability for false reporting media”.


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