US Federal judge shows support for crypto miner in Chinese ownership dispute

Attorneys representing Jones Eagle LLC, the operator of a crypto mining center, filed for a temporary restraining order (TRO) along with a preliminary injunction. US authorities began to listen to the crypto entity even before Trump’s January inauguration. Chief U.S. District Judge Kristine Baker issued the TRO.

Jones Eagle sued the State, Wes Ward as Secretary of Agriculture, and Griffin as Attorney General on November 13 in the U.S. District Court for the Eastern District of Arkansas.

A federal magistrate in Little Rock temporarily prevented the defendants from enforcing two laws that pertained to businesses and property owned by the Chinese nationals.

The lawsuit states that the two laws violate the Fourteenth and Fifth Amendments of the U.S. Constitution. The plaintiffs claim the defendants did not respect due process, discriminated against people based on their nationality, and took property without paying fair compensation.   

Details of the court’s assistance   

Baker’s order prohibits state officials from enforcing Act 636 of 2023 and Act 174 of 2024 against Jones Eagle. Act 636 prohibits the ownership of property in Arkansas by companies or individuals associated with the Chinese government, and several other countries considered adversaries of the United States.

Jimmy Chen is a naturalized U.S. citizen residing in New York. 

The Act grants the state’s agriculture department the authority to investigate allegations of such ownership and instructs the attorney general to take action to force the sale of the property through judicial foreclosure.

Act 174 amended the law governing digital asset mining operations, which are also known as data centers. It now prohibits the ownership of “foreign-party-controlled” interests associated with the same countries stated in Act 636.

Chen exerts control over the firm through Eagle Asset Holding Inc., which holds a majority interest in Jones Eagle, as detailed in court filings.

The order remains in effect for a period of 14 days, following which a court hearing will convene to address the company’s petition for a preliminary injunction and the potential extension of the restraining order.

How did these parties get here?

Ward mentioned Jones Digital LLC, the previous name of Jones Eagle, in a letter to Griffin that was included in a news release from Gov. Sarah Huckabee Sanders. According to the letter, an increasing number of enterprises across the state have established digital asset activities by 2023.

The letter reads, “One of these facilities is located on agricultural land near the city of DeWitt and is operated by Jones Digital LLC. A review of Jones Digital’s ownership indicates that the entity may have significant ties to China.  Further, it is believed that the individuals or entities involved in the ownership of Jones Digital LLC may also have significant ownership interest in other digital assets or crypto-mining operations in other parts of the state under different names.”

Chen claims that, upon receiving the referral to Griffin’s office, he issued the attorney general with documentation demonstrating that his organization operates on two acres of leased land. He also claims that he attempted to meet with the attorney general’s staff to provide evidence of his U.S. citizenship and ownership of the corporation but has been denied.

According to court filings, Chen filed the suit because he believes the attorney general is preparing to take action that will affect his business and reputation. 

On the other hand, Griffin, in a statement, said he would continue to vigorously defend the constitutionality of Acts 636 and 174. He said, “I have been investigating a number of crypto mining operations and simply seeking the facts, but not all of the entities have cooperated fully.”

Jones Eagle has confidence in a favorable ruling  

In a statement Tuesday, Chen’s Little Rock attorney, Alex Jones, said that “because a TRO is usually only granted when a Court believes that a party is likely to succeed on the merits, we are cautiously optimistic that the Court will grant the preliminary injunction.”

The statement asserts, “The TRO and preliminary injunction will prevent further harm to our client while we prepare for a trial on the merits where we will get to fully present our case as to why the laws are unconstitutional and reflect legislative overreach.”

The lawsuit filed by Chen claims that the investigation and referral by Ward’s office were solely based on his Asian name. It explained that there are violations of the U.S. Constitution because of the discrimination against him and his business based on his racial identity and nation of origin.

Trump’s victory has raised expectations that the US will become a leading crypto hub. If this happens, one would expect fewer discriminative actions against organizations mining crypto in the US.

Land a High-Paying Web3 Job in 90 Days: The Ultimate Roadmap