Wyoming Bitcoin Miner Accuses Legislative Committee Member Of Chinese Ties

Things got a little testy during a legislative committee meeting this week when a Wyoming bitcoin miner accused a member of the committee of representing interests of the Chinese Communist Party.

LW
Leo Wolfson

November 22, 20238 min read

A bitcoin mining facility near F.E. Warren Air Force Base just west of Cheyenne.
A bitcoin mining facility near F.E. Warren Air Force Base just west of Cheyenne. (Greg Johnson, Cowboy State Daily)

Wyoming bitcoin miner Sean Murphy is upset with the state’s the state’s Select Committee on Blockchain, Financial Technology and Digital Innovation Technology, demanding the removal of two of members for a perceived conflict of interest.

In May, Murphy’s Bison Blockchain filed a $22 million lawsuit in Wyoming federal court against five companies based in Delaware and the Cayman Islands related to its bitcoin mines in Cheyenne.

Bison Blockchain alleges that about eight “corporate entities” run by Chinese nationals with varying levels of connections to companies in China — including the largest manufacturer of bitcoin miners in the world — had pushed his Wyoming-based company out of a five-year service agreement with Black Hills Energy.

This week, Murphy referred to his original agreement with Black Hills as the largest blockchain deal in Wyoming history, worth $175 million.

Court records show that a separate Chinese company also involved in bitcoin mining, YZY Capital Holdings, bought a separate plot of land near the other bitcoin mining facilities.

YZY was represented by Cheyenne law firm Hathaway and Kunz, a firm at which Select Committee member Matt Kaufman is an attorney and who Murphy said represented YZY on a previous project. Kaufman is considered a liaison member of the committee as a member of the public at large.

Kaufman told Cowboy State Daily he can’t comment directly on his firm’s ongoing litigation, but said he doesn’t personally represent YZY today and hasn’t talked to this business “in a long time.”

Murphy said Hathaway and Kunz also represents another member of the Chinese Communist Party (CCP) and requested that Kaufman either step down from the committee or have his firm stop representing CCP-backed entities.

Neither Kaufman nor any other member of the committee directly responded to this demand during the meeting.

Kaufman told Cowboy State Daily on Tuesday it’s common for people to not understand the legislative rules on decorum and called Murphy’s accusations “misguided” and inaccurate.

“Mr. Murphy’s attempts to misuse the legislative forum on an entirely different topic to draw attention to a contractual litigation dispute between his own company and a business partner, which our firm represents, is unfortunately not something we are permitted to comment on while in federal court,” Kaufman said. “In the meantime, Hathaway & Kunz will continue to put our heads down and work, as we always have, to help build up, protect and strengthen our great state.”

Is It That Simple?

Murphy asserts that anyone who is a member of the CCP is an ideological enemy of American values.

“That’s a conflict of interest,” Murphy said. “This is an enemy of the United States and an enemy of the state.”

State Rep. Cyrus Western, R-Ranchester, co-chair of the committee, said it’s not so simple. He said although America should cast a suspicious eye on Chinese-owned businesses, hundreds of millions of dollars in Chinese money flows into the American economy every year and that any business from China is at least somewhat connected to the CCP.

Western said Chinese businesses operating in the U.S. should receive more scrutiny, but also shouldn’t receive automatic rejection, as this would block legitimate commerce that’s not a threat to American security interests.

“We absolutely need to put an extra layer of scrutiny on everything,” Western said. “Does that mean we automatically need to reject every type of commerce and transaction? No, of course not.”

Western also said just because a company is Chinese owned doesn’t inherently make it an enemy, and that some of these companies are traded publicly on U.S. financial markets. As long as there is “a process for examination for scrutiny, and you still feel you can achieve your strategic objectives and ensure there’s no malfeasance or foul play,” which Western said exists, he has no problem with it.

Murphy said he stands firmly against any political group that is killing women, children and the elderly.

“That’s something we have to stand against,” he said.

Human rights groups have accused the Chinese government of detaining more than 1 million Muslim Uyghurs over the past few years in a large network of what the state calls "re-education camps." The CCP also has been accused of implementing a shoot-to-kill policy for those trying to escape.

Murphy attempted to bring his senator, Cheyenne Republican Affie Ellis, into the discussion, but she wasn’t having it and said the discussion should be ended.

“I think we’ve really veered off course,” she said. “I understand these are public forums, but it’s also one thing to start a conversation about the private workings of a law firm where there’s confidentiality requirements about attorneys.”

Sean Murphy of Bison Bitcoin, left, accused Select Committee on Blockchain, Financial Technology and Digital Innovation Technology member Matt Kaufman, right, of having a conflict of interest during a committee meeting this week.
Sean Murphy of Bison Bitcoin, left, accused Select Committee on Blockchain, Financial Technology and Digital Innovation Technology member Matt Kaufman, right, of having a conflict of interest during a committee meeting this week. (Courtesy Photos)

Another Call-Out

Murphy also asked for the resignation of Wyoming Stable Token Commission member Jeff Wallace, a Cheyenne banker who until recently served on the Denver Branch Board of Directors of the Federal Reserve Bank of Kansas City.

Murphy said one of the main purposes behind establishing Wyoming stable tokens was to hedge against a federal government-run digital currency. He believes the Wyoming stable token has been hijacked by the very interests it was designed to be protected from and compete against and requested any committee member with a conflict of interest to the federal reserve or any banking institution step down.

“That was the entire premise that we were going to create something that wasn’t a CBDC (Central Bank Digital Currency) that provided people, Wyomingites, institutions, a financially free, liberty-focused way to transact,” he said.

Murphy said the lack of common knowledge for how stable tokens and cryptocurrency as a whole operates allows the federal government to take advantage of how it is implemented. As soon as he saw Wallace on the board, Murphy said he instantly suspected impropriety.

Wallace pointed out to Cowboy State Daily that his term on the Reserve Bank board expired at the end of 2022.

He also said Wyoming banks want to make sure they “are keeping track of what’s going on with the stable coins” and how this new industry could affect the traditional banking industry in Wyoming.

“That’s kind of my main concern is making sure we’re not disintermediating any deposits out of Wyoming banks that can be put to work in Wyoming, so I’m not really sure where the conflict might be there,” Wallace said.

Although Rep. Daniel Singh, R-Cheyenne, a member of the committee, said he shares Murphy’s desire for liberty and freedom, he found the bitcoin miner’s allegations inappropriate.

“It is because I believe in our foundational principles that I am inclined to assume that Mr. Wallace is innocent,” Singh said. “Putting someone on the spot during a public committee meeting is not an appropriate way to address a grievance.”

Both Kaufman and Wallace were appointed to the committee as non-voting, liaison members by Gov. Mark Gordon. Western said it would be Gordon who would have the power to remove these members from the committee.

‘Reckless Government Spending’

Also Monday, the Wyoming Stable Token Commission requested an $8 million to $12 million budget for the next biennium, a significant increase from the commission’s current $650,000 budget.

Murphy considers this cost “reckless government spending” and fears it will be hidden somewhere within the 2024-2025 biennium budget. He believes the commission was originally proposed as a much modest enterprise.

“It’s pretty concerning that there’s that much of a budget going to something where it’s not even going to be openly debated,” he told Cowboy State Daily.

Murphy had applied to be the executive director of the commission, but the committee instead chose Anthony Apollo for the role.

Western said the size of Apollo’s budget request is legitimate as the organization requires a staff with deep expertise and the use of high-level technology.

“There are so many moving parts on a really granular level and for people who understand that, who can help implement that, aren’t cheap,” Western said. “From a very high-level perspective, some of these things are very expensive.”

The Wyoming Stable Token Commission was established with the passage of Senate Enrolled Act 85 – Wyoming Stable Token Act, which authorizes the Wyoming Stable Token Commission to issue Wyoming stable tokens.

Leo Wolfson can be reached at Leo@CowboyStateDaily.com.

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Leo Wolfson

Politics and Government Reporter