Jerry Yu epitomizes what the Chinese refer to as second-generation wealth. He has a Connecticut prep-school education and resides in a Manhattan condo he bought for $8 million from Jeffrey R. Immelt, the former General Electric chief executive. Beyond that, he also holds majority ownership in a Bitcoin mine in Texas, which he acquired for over $6 million last year.
Mr. Yu is a student at New York University and has unintentionally become a case study in how Chinese nationals can move money from China to the United States without attracting the attention of authorities in either country. The Texas computing center was purchased using cryptocurrency, enabling complete anonymity and bypassing U.S. banking regulations and Chinese restrictions on funds leaving China.
The underlying secrets were brought to light through lawsuits that exposed transactions involving Chinese investors spending hundreds of millions of dollars to build or operate crypto mines in the U.S. after such operations were banned in China in 2021. These mines allow Chinese investors to generate cryptocurrency such as Bitcoin, which they can exchange for U.S. dollars.
Despite legal issues arising from the mine dealings in Texas, Yu’s lawyer maintains that his company complies with all applicable laws and regulations. The financing methods employed by the investors in the mine make it impossible to trace the source of the funds, as they used Tether, a cryptocurrency known for offering complete anonymity without the associated price volatility.
Moreover, a court order would be required to trace the individual who sent the funds to that exchange after they were sent to a centralized service on the blockchain. Despite these concerns, Tether payments are widespread in the Bitcoin-mining industry and are used to buy specialized computers and avoid sales and capital gains taxes.
Ultimately, Mr. Yu’s legal counsel would not confirm the identities of the BitRush shareholders or Mr. Yu’s potential connection to them, leaving many unanswered questions about his financial arrangements and investors.