Arkansas Judge Backs Chinese Crypto Miner in Ownership Lawsuit

Key Takeaways

• Chen’s attorney, Alex Jones, criticized the laws as unconstitutional and argued they represent an overreach by the state.
• The TRO issued by Judge Baker halts the enforcement of both laws for 14 days

On November 25, Chief U.S. District Judge Kristine Baker issued a temporary restraining order (TRO) blocking the enforcement of two Arkansas laws targeting foreign ownership of digital asset mining operations and property. The laws, Act 636 of 2023 and Act 174 of 2024, aimed at businesses and property owned by Chinese nationals.

The case centres on Jones Eagle, a crypto mining firm based in Arkansas, which was challenged under these laws. Act 636 prohibits ownership of property in Arkansas by companies or individuals linked to the Chinese government, while Act 174 restricts foreign ownership of digital asset mining operations, effectively barring foreign entities from running crypto mining businesses in the state.

The TRO issued by Judge Baker halts the enforcement of both laws for 14 days, giving time for further legal proceedings. The judge’s decision was based on the likelihood that the plaintiff, Qimin “Jimmy” Chen—a naturalized U.S. citizen of Chinese descent—will succeed in his challenge to the laws on constitutional grounds. Chen, who owns a majority stake in Jones Eagle through Eagle Asset Holding, claims the laws discriminate against him due to his national origin.

Chen filed the lawsuit, asserting that the laws violate several constitutional protections, including equal protection under the law, due process, and property rights. He argues that, as a naturalized U.S. citizen, the laws should not apply to him. His legal team argued that laws are an overreach by the state, violating his rights as an American citizen.

The Arkansas government had sought to enforce the laws to prevent foreign influence, especially by entities linked to China, in key sectors such as real estate and cryptocurrency mining. State officials had accused Chen of being connected to Chinese interests and demanded the shutdown of his mining operation.

Arkansas Attorney General Tim Griffin has however strongly defended two state laws arguing taht they are necessary measures to protect state interests. Griffin added that the laws are needed to ensure state security and economic protection, particularly given the potential risks posed by foreign investments in critical infrastructure.

However, the TRO prevents Arkansas from enforcing these restrictions while the case progresses. A hearing on whether the TRO should be extended into a preliminary injunction is scheduled for early December.