Bitmain under U.S. investigation over national security concerns

Bitmain, a Chinese manufacturer of Bitcoin mining equipment, is under scrutiny by US authorities over its products and whether they pose a risk to US national security. According to reports, the company has been subject to a months-long investigation.

An elite investigative team examined Bitmain devices seized at American ports, both the chips and firmware, looking for backdoors or vulnerabilities. Meanwhile, parallel discussions continued at the White House National Security Council that began under President Joe Biden and continued into at least the early months of the Trump administration.

US worries Bitmain’s products could be manipulated

According to reports, Bitmain has been at the center of an undisclosed investigation, known as “Operation Red Sunset,” led by the Department of Homeland Security. Specifically, the investigation was started to assess whether the Beijing-based firm’s machines could be remotely manipulated for spying or used to compromise the US power grid.

Security concerns over Chinese-owned Bitcoin mines emerged last year after The New York Times reported that several facilities with ties to the Chinese Communist Party were operating near critical US infrastructure. 

In addition to chip and firmware inspections of Bitmain machines at US ports, investigators also examined potential tariff and import tax violations.

The officials declined to say what investigators found, and the current status of the inquiry remains unclear. A spokesperson for the Department of Homeland Security told Bloomberg that it “does not comment on open and active investigations.”

The facilities include one next to a Microsoft data center supporting the Pentagon and near an Air Force nuclear missile base in Cheyenne, Wyoming. Many of these operations were equipped with Bitmain machines.

The company’s name resurfaced in July in a Senate Intelligence Committee report, which stated that its devices could be manipulated from China and posed “several disturbing vulnerabilities” to the US.

Bitmain calls allegations “unequivocally false”

In response to the accusations, Bitmain stated it strictly complies with US and applicable laws and regulations and has never engaged in activities that pose risks to US national security. It described the accusations as “unequivocally false.”

Additionally, the company added that it was unaware of any investigation named Operation Red Sunset, or one into tariffs or other import duties. It attributed past equipment detentions to routine concerns from the Federal Communications Commission, stating that nothing out of the ordinary was found.

Bitmain also rejected suggestions of ties to the Chinese government raised in the Senate report that described its equipment as a risk when deployed near sensitive US facilities.

The two largest economies have been experiencing issues that have intensified since Trump took office. Recently, China’s cybersecurity agency accused the US government of orchestrating the theft of approximately $13 billion worth of Bitcoin from a Chinese mining operation. This marked Beijing’s latest effort to blame Washington for major cyberattacks. 

At the same time, as reported by Cryptopolitan, the US Department of Justice (DOJ), the FBI, and the Secret Service have created a new interagency task force to combat crypto scams linked to Chinese transnational criminal organizations targeting Americans.

Trump’s family venture under scrutiny over ties to Bitmain

The investigation has drawn fresh attention to Trump’s sons expanding their involvement in the Bitcoin mining sector. According to SEC filings, their venture with Hut 8, American Bitcoin, purchased 16,000 Bitmain machines in August for $314 million. 

Additionally, the SEC filings revealed that American Bitcoin is paying Bitmain in “pledged” Bitcoin rather than cash. This is to be redeemed up to two years from now, at the current price. 

In response, a company’s spokesperson stated that American Bitcoin “takes national security, grid stability, and operational security extremely seriously.” He added that it conducted extensive security tests on the hardware and found no vulnerabilities that would permit remote access.

Trump officials have also rejected concerns that the Trump family’s crypto ventures could influence federal investigations.

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