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INTANGIBLE ASSETS, NET
 6 Months Ended
Jun. 30, 2025
Goodwill and Intangible Assets Disclosure [Abstract]  
INTANGIBLE ASSETS, NET

8. INTANGIBLE ASSETS, NET

 

Intangible assets, net consist of the following:

 

   June 30,
2025		   December 31,
2024		 
   US$   US$ 
Acquired broker-dealer license deemed to have an indefinite life   120,000    120,000 
Crypto assets   1,544,790    3,019,896 
The right to recover the crypto assets   —    — 
Total intangible assets, net  $1,664,790   $3,139,896 

 

Acquired broker-dealer license deemed to have an indefinite life

 

On May 3, 2023, our US subsidiary Chaince Securities, Inc. entered into a Purchase and Sale Agreement for the acquisition of a fully licensed broker-dealer (the “broker dealer”), for a $120,000 total price consideration. On November 18, 2024, Chaince Securities, Inc. received approval from the Financial Industry Regulatory Authority (“FINRA”) for the change in ownership of the broker dealer. On December 6, 2024, Chaince Securities, Inc. acquired all the rights and benefits associated with the broker dealer from the seller. Given the absence of other distinguishable assets and liabilities, the consideration of $120,000 for our acquisition of the broker dealer is solely determined by the fair market value of the broker-dealer license. Given the premise of continuous operation, the broker-dealer license is not subject to a limit on its operating period. Therefore, we classify it as an intangible asset with indefinite useful life.

 

Our acquired broker-dealer license is measured at cost minus impairment loss. We estimated the fair values of the acquired broker dealer license, and no impairment loss was recognized for the year ended December 31, 2024. We estimated the fair values of the acquired broker dealer license, and no impairment loss was recognized for the six months ended June 30, 2025.

 

Crypto assets

 

Crypto assets consist of the following:

 

  

June 30,

2025

   December 31,
2024		 
   US$   US$ 
Filecoin (i)   1,544,790    3,019,896 
Total crypto assets  $1,544,790   $3,019,896 

 

(i)

As of June 30, 2025, the Company held approximately 679,029 Filecoins with the carrying amount of $1,544,790, of which 104,647 Filecoins came from the asset purchase agreement with Huangtong International Co., Ltd. closed on December 15, 2022, about 274,709 Filecoins were borrowed from Huangtong International Co., Ltd. to meet the pledge needs for Filecoin mining business, about 150,000 Filecoins were borrowed from HDP Capital Management Limited to meet the pledge needs for Filecoin mining business, and 149,673 Filecoins came from the Filecoin physical mining business. Out of the 679,029 Filecoins, approximately 563,472 Filecoins are in a pledged and locked position in the Company’s node accounts for the needs of Filecoin mining operating.

 

As of December 31, 2024, the Company held 628,883 Filecoins with the carrying amount of $3,019,896, of which 104647 Filecoins came from the asset purchase agreement with Huangtong International Co., Ltd. closed on December 15, 2022, about 274,709 Filecoins were borrowed from Huangtong International Co., Ltd. to meet the pledge needs for Filecoin mining business, about 150,000 Filecoins were borrowed from HDP Capital Management Limited to meet the pledge needs for Filecoin mining business, and 99,527 Filecoins came from the Filecoin physical mining business. Out of the 628,883 Filecoins, approximately 425,396 Filecoins are in a pledged and locked position in the Company’s node accounts for the needs of Filecoin mining operating.

 

 

The movement of the crypto assets for the six months ended June 30, 2025, 2024 and 2023 is as follows:

 

   2025   2024   2023 
   For the six months ended June 30, 
   2025   2024   2023 
   US$   US$   US$ 
Balance as of January 1, 2025, 2024 and 2023   3,019,896    705,309    288,419 
Purchase or borrowing (i)   —    997,408    — 
Mining out (ii)   208,008    296,177    166,242 
Payment for Filecoin joint mining profit sharing (iii)   (32,283)   —    — 
Impairment loss (iv)   —    —    (79,821)
Gain/loss on market price changes (iv)   (1,620,625)   (651,441)   — 
Cumulative effect upon adoption of ASU 2023-08 (iv)   —    763,072    — 
Others (v)   (30,206)   (21,727)   — 
Balance as of June 30, 2025, 2024 and 2023   1,544,790    2,088,798    374,840 

 

(i) During the six months ended June 30, 2024, about 196,000 Filecoins with the fair value of $997,408 were borrowed from Huangtong International Co., Ltd., to meet the pledge needs for Filecoin mining business.
   
(ii)

During the six months ended June 30, 2025, the Company mined out 68650.67 Filecoins from the Filecoin physical mining business, and the Company recognized a total revenue of $208,008 based on the lowest transaction price on the Coinbase platform on the day of receiving the Filecoin rewards.

 

During the six months ended June 30, 2024, the Company mined out 45574.55 Filecoins from the Filecoin physical mining business, and the Company recognized a total revenue of $296,177 based on the lowest transaction price on the Coinbase platform on the day of receiving the Filecoin rewards.

 

During the six months ended June 30, 2023, the Company mined out 33,552.58 Filecoins from the Filecoin physical mining business, and the Company recognized a total revenue of $166,242 based on the lowest transaction price on the Coinbase platform on the day of receiving the Filecoin rewards.

   
(iii)

During the six months ended June 30, 2025, the Company distributed 11,436.84 Filecoins to HDP Capital Management Limited (our partner in Filecoin joint mining) as joint mining profit sharing, and the Company recognized a total cost of $32,283 based on the lowest transaction price on the Coinbase platform on the day of receiving the corresponding Filecoin rewards.

   
(iv)

Effective January 1, 2024, the Company adopted ASU No. 2023-08, Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”) using a modified retrospective approach, which requires crypto assets to be measured at fair value for each reporting period with changes in fair value recorded in net income or loss. Upon adoption, the Company recognized the cumulative effect of initially applying ASU 2023-08 of a $763,072 increase, as an adjustment to the opening balance of retained earnings.

 

The Company totally recognized the loss on market price of crypto assets of $1,620,625 and $651,441 for the six months ended June 30, 2025 and 2024.

 

Prior to the adoption of ASU 2023-08, crypto assets held were accounted for as intangible assets with indefinite useful lives. An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur, principally decreases in the quoted prices of the cryptocurrencies, indicating that it is more likely than not that the indefinite-lived asset is impaired. In determining if an impairment had occurred, the Company considered the intraday lowest quoted price of one unit of crypto asset since acquiring the crypto asset. If the then current carrying value of the unit of crypto assets exceeded the fair value so determined, an impairment loss has occurred with respect to those units of crypto assets in the amount equal to the difference between their carrying values and the fair value determined. To the extent an impairment loss was recognized, the loss established the new cost basis of the asset. Subsequent reversal of impairment losses was not permitted. We estimated the fair values of the cryptocurrencies based on the lowest transaction price on the Coinbase platform every day and totally recognized $79,821 impairment loss for the six months ended June 30, 2023.

   
(v)

Other movements of the crypto assets include Filecoins transferred to external personnel to help the Company deposit Filecoins into the new node accounts to meet the staking requirements for mining to achieve a higher efficiency, gas cost consumed by Filecoin transfer, as well as transfer income from Filecoin node account testing.

 

 

The right to recover the crypto assets

 

On February16, 2022, former acting Chief Financial Officer Wei Zhu, who was also the Company’s former Co-Chief Executive Officer, and a former member and Co-Chairperson of the Board, was taken away from the Company’s office in Shenzhen, China for personal reasons to cooperate with the investigation from Sheyang County Public Security Bureau, Yancheng City, Jiangsu Province, People’s Republic of China. At the same time, Sheyang County Public Security Bureau forcibly removed the safe belonging to the Company that stored the digital asset hardware cold wallet, and forcibly destroyed the safe and seized the crypto asset hardware cold wallet and all crypto assets stored in it, and we verified that 95.23843 Bitcoins and 2005537.5 USD Coins with a book value as of December 31, 2022 of $3,469,762 stored in the out-of-control wallet had been transferred to another unknown wallet.

 

The deposit status of the Bitcoins and USD Coins that are outside of the Company’s control on June, 2025 are as follows:

 

       The portion that was still stored in the hardware cold as of December 31, 2024   The portion that that are forwarded to unknown addresses as of December 31, 2024 
Crypto assets  Quantities   Quantities   Quantities 
             
Bitcoins   125.8584797    30.62004    95.23843 
USD Coins   2,005,537.50    —    2,005,537.5 

 

Although we are still trying to restore the company’s control over these out-of-control assets through a series of legal means, we cannot estimate whether positive results will be achieved and how long the time required. In order to eliminate the uncertainty caused by this incident to the Company’s consolidated financial statements, we had made impairment provisions for all these out-of-control crypto assets in our consolidated financial statements as of December 31, 2023. As of June 30, 2025 and December 31, 2024, the consolidated financial statements presented a net zero balance for the out-of-control crypto assets.