March 16, 2021

OFAC suspends sanctions on Xiaomi Corporation and CCMC following preliminary injunction

On March 14, 2021, OFAC published frequently asked questions 880 and 881 related to Xiaomi Corporation, Luokung Technology Corp., and Executive Order 13959, “Addressing the Threat from Securities Investments that Finance Communist Chinese Military Companies.”  Xiaomi Corporation was added to the list of Communist Chinese military companies (CCMC) on January 14, 2021 pursuant to section 4(a)(ii) of EO 13959, as amended.  On March 12, 2021, however, the US District Court for the District of Columbia issued a preliminary injunction against enforcement of the sanctions.  OFAC issued FAQ 880 to announce the preliminary injunction and to note that EO 13959 sanctions against Xiaomi would remain on hold until the issuance of a further order in the case.

FAQ 881 relates to the inaccurate listing on January 14, 2021 of Luokong Technology Corporation on the CCMC list pursuant to section 4(a)(ii) of EO 13959.  The Secretary of Defense corrected the issue by delisting Luokong Technology Corporation and replacing it with the correct entity name, Luokung Technology Corp.,  thereby allowing section 1(a)(ii) prohibitions to take effect against the company 60 days thereafter, on May 8, 2021, and 1(c) prohibitions to take effect 365 days later.  

FAQ 881 was prompted by a lawsuit filed on March 4, 2021 by Luokung Technology Corp. in the US District Court for the District of Columbia in which Luokung and two of its US shareholders filed a Motion for Temporary Restraining Order requesting that the court enjoin the application and enforcement of EO 13959 prohibitions against Luokung.  In its TRO motion , Luokung argued that its designation was unlawful because it is a private and not a state-owned company.  Luokung also alleged that sanctions should be put on hold pursuant to General License 1A, which authorizes otherwise prohibited transactions with any company whose name is a close but not exact match on the CCMC list, until May 27, 2021.  According to a joint motion filed by the parties, the correction of the name as described in FAQ 881 effectively obviated the need for Luokung’s TRO, and on March 11, 2021 the motion was eventually denied as moot by the court.

OFAC Recent Action (links to FAQs) | Memorandum in support of Motion for Temporary Restraining Order | Joint Motion to Vacate Temporary Restraining Order Schedule | Minute Entry Order | Luokung Technology Corp. Press Statement