Biden Orders Divestment of Chinese-Owned Crypto Mining Property Near Air Force Base

News | June 3, 2024 By:

On Monday, May 13, 2024, President Joe Biden took the rare step of issuing a Presidential decision ordering the divestment of Chinese-owned real estate located near the Francis E. Warren Air Force Base (Warren AFB) in Wyoming and the removal of all equipment and improvements at the property.

The divestment order pertains to property and assets owned by MineOne Partners Limited, a British Virgin Islands company ultimately majority-owned by Chinese nationals, and certain of its affiliates (collectively, “MineOne”).

According to the order, MineOne acquired the real estate near Warren AFB in June 2022 and built assets on the property to support its cryptocurrency mining operations. The Committee on Foreign Investment in the United States (CFIUS) subsequently became aware of the transaction through a public tip and investigated the acquisition as a “non-notified transaction” since no notice had been submitted. CFIUS identified national security risks associated with MineOne’s ownership of the land and its cryptocurrency operations, which use specialized equipment capable of facilitating surveillance activities.

As an interagency committee chaired by the Treasury Department, CFIUS reviews “covered transactions” involving foreign investments under Section 721 of the Defense Production Act. The 2018 Foreign Investment Risk Review Modernization Act expanded CFIUS’s jurisdiction to certain real estate transactions near sensitive military sites. While CFIUS can negotiate mitigation agreements to address risks, in this case, the risks could not be sufficiently mitigated, resulting in the referral to the President.

Under Section 721, when risks cannot be addressed through other means, the President can block or unwind transactions. Divestment orders are rare and typically issued when parties refuse to voluntarily abandon transactions or agree to mitigation terms. The Treasury Department said MineOne was either unwilling or unable to fully address the identified national security risks.

The Presidential decision specifically requires MineOne to sell its real estate interests within 120 days, prohibits MineOne personnel from accessing the site, and requires the removal of MineOne’s equipment and improvements within 90 days. MineOne must also submit weekly reports on divestment and removal efforts.

This represents President Biden’s first divestment order under the CFIUS statute and the first prohibiting a real estate transaction it reviewed. The case follows the Treasury Department’s recent proposal to enhance CFIUS’s authority over foreign investments and real estate deals to better evaluate national security risks. The new rules aim to strengthen CFIUS’s ability to protect national security.