Biden Administration Orders Wyoming Crypto Mining Company to Divest Ownership Over Ties to China

Last week, the Biden administration ordered a Wyoming cryptocurrency mining company, MineOne, to sell off its ownership due to ties to China. The Committee on Foreign Investment in the United States (CFIUS) reviewed the case. This U.S. federal body investigates foreign investments that might threaten national security under the Defense Production Act.

On May 13, President Joe Biden ordered MineOne, located near an Air Force base, to divest its interest in the company. The administration cited evidence that MineOne, through its real estate acquisition within a mile of Francis E. Warren Air Force Base, might endanger U.S. national security. The company had bought the land in June 2022 and converted it for cryptocurrency mining, close to a strategic missile base. Officials said MineOne is majority-owned by Chinese nationals.

The transaction was flagged by CFIUS only after a public tip led to an investigation. National security risks were identified due to the proximity of the real estate to Warren AFB and the foreign-sourced equipment used for mining. The closeness to a strategic missile base and potential espionage capabilities posed significant concerns.

Biden's order prohibits MineOne's property acquisition or ownership. Within 90 days, the owners must remove all structures and items. They are barred from accessing the property and must sell or transfer ownership within 120 days.

CFIUS Legal Analysis

Cryptocurrency companies must be aware of CFIUS and its reporting requirements. Transactions triggering CFIUS review involve critical technology, infrastructure, or sensitive personal data (TID companies). A legal determination is needed to see if a target business deals in these areas and if the foreign investment meets CFIUS criteria, requiring counsel's assistance.

Critical technology includes weapons, nuclear facilities, and controlled emerging technologies. Critical infrastructure spans telecommunications, power, defense, and ports. Sensitive personal data involves identifiable information and genetic data.

The Foreign Investment Risk Review Modernization Act of 2018 expanded CFIUS's authority to review even non-controlling foreign investments and supply chain steps in critical technology businesses.

Mandatory Filings with CFIUS

Transactions granting foreign persons certain rights with U.S. TID businesses require CFIUS notification and approval. Mandatory filings are needed when foreign investors gain control or access to critical technology, infrastructure, or sensitive data. This includes board seats, decision-making involvement, or substantial interest by foreign governments.

Voluntary filings can also be made via a declaration or notice. CFIUS review timelines vary. Declarations must be filed 30 days before the transaction closes, with a 45-day review period. Investigations can extend for another 45 days, with an extra 15 days in extraordinary cases, totaling up to 105 days. Reviews can exceed nine months if rejections, resubmissions, or complications occur.

Failing to file can lead to post-closing reviews, penalties up to $250,000 per violation, and possible forced divestiture.