SecProbe.io

United States securities and exchange commission logo
September 22, 2023
Shi Qiu
Chief Executive Officer
Mercurity Fintech Holding Inc.
1330 Avenue of the Americas, Fl 33
New York, NY 10019
Re:Mercurity Fintech Holding Inc.
Form 20-F for the fiscal year ended December 31, 2022
Filed April 25, 2023
File No. 001-36896
Dear Shi Qiu:
            We have reviewed your August 14, 2023 response to our comment letter and have the
following comments.  In some of our comments, we may ask you to provide us with information
so we may better understand your disclosure.
            Please respond to these comments within ten business days by providing the requested
information or advise us as soon as possible when you will respond.  If you do not believe our
comments apply to your facts and circumstances, please tell us why in your response.
            After reviewing your response to these comments, we may have additional
comments.  Unless we note otherwise, our references to prior comments are to comments in our
July 17, 2023 letter.
Form 20-F for the year ended December 31, 2022
Item 5. Operating and Financial Review and Prospects
D. Trend Information, page 70
1.We have reviewed your response to prior comment 1. In your response, you state that you
will, together with Dheng, continue to vigorously pursue the Recovery Proceeding,
attempting to regain your cold wallet and the related cryptocurrencies. Please reconcile
this to your statement that if the case enters the judicial procedures, the Company can
submit evidence to the court to plead for restoration of its ownership and control rights
over the cold wallet and cryptocurrencies. In this regard:
•More fully articulate your view that the cryptocurrencies were wrongfully seized and
that control over these cryptocurrencies will be recovered by the Company;
•Clarify what a Recovery Proceeding is and how it relates to what you refer to as

 FirstName LastNameShi Qiu
 Comapany NameMercurity Fintech Holding Inc.
 September 22, 2023 Page 2
 FirstName LastNameShi Qiu
Mercurity Fintech Holding Inc.
September 22, 2023
Page 2
entering “judicial procedures;”
•Explain whether the case entering the judicial procedures is the only mechanism
under the law to recover your cryptocurrencies or if there are other means of
recovery;
•Tell us whether there are any conditions precedent to entering into the judicial
process. If so, explain whether you believe those conditions represent uncertainties
related to the seizure of your cryptocurrencies; and
•Update for us the chronology of events since March 1, 2023.
Item 15. Controls and Procedures, page 101
2.We note your response to prior comment 2 provides that regarding your digital asset
hardware cold wallet, the password and key of the safe were kept by the former Acting
CFO, Wei Zhu, and your Cashier, respectively, and that you plan to make the new
adjustments provided to your policy once the seizure of your digital assets is lifted.  Please
provide us the following:
•Clarify for us if your Cashier is in the CFO's chain of command;
•If so, tell us how the Cashier being in the same chain of command provides effective
internal controls over financial reporting and reference for us the authoritative
guidance you rely upon to support your conclusion; and
•Please tell us if your digital asset policy is currently in compliance with your new
standards, and if not, clarify what remediation remains pending.
Item 16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections, page 104
3.We note your proposed statement that you reviewed your register of members and
Schedules 13G filed by holders of your ordinary shares in connection with your required
submission under paragraph (a). Please supplementally describe any additional materials
that were reviewed and tell us whether you relied upon any legal opinions or third party
certifications such as affidavits as the basis for your submission. In your response, please
provide a similarly detailed discussion of the materials reviewed and legal opinions or
third party certifications relied upon in connection with the required disclosures under
paragraphs (b)(2) and (3).
4.In order to clarify the scope of your review, please supplementally describe the steps you
have taken to confirm that none of the members of your board or the boards of your
consolidated foreign operating entities are officials of the Chinese Communist Party. For
instance, please tell us how the board members’ current or prior memberships on, or
affiliations with, committees of the Chinese Communist Party factored into your
determination. In addition, please tell us whether you have relied upon third party
certifications such as affidavits as the basis for your disclosure.
5.Please note that Item 16I(b) requires that you provide disclosures for yourself and your
consolidated foreign operating entities, including variable interest entities or similar
structures. In this regard, we note that your list of subsidiaries in Exhibit 8.1 appears to

 FirstName LastNameShi Qiu
 Comapany NameMercurity Fintech Holding Inc.
 September 22, 2023 Page 3
 FirstName LastNameShi Qiu
Mercurity Fintech Holding Inc.
September 22, 2023
Page 3
indicate that you have subsidiaries in Hong Kong and countries outside China.
•With respect to (b)(2), please revise your proposed disclosure to clarify the
jurisdictions in which your consolidated foreign operating entities are organized or
incorporated and provide the percentage of your shares or the shares of your
consolidated operating entities owned by governmental entities in each foreign
jurisdiction in which you have consolidated operating entities.
•With respect to (b)(3), please revise your proposed disclosure to provide the required
information for you and all of your consolidated foreign operating entities and
reference the jurisdiction of your auditor, which the PCAOB was unable to inspect or
investigate completely because of a position taken by an authority in the foreign
jurisdiction.
6.With respect to your proposed disclosure pursuant to Item 16I(b)(5), we note that you
have included language that such disclosure is “to the best of our knowledge.” Please
revise your proposed disclosure to confirm without qualification, if true, that your articles
and the articles of your consolidated foreign operating entities do not contain wording
from any charter of the Chinese Communist Party.
Consolidated Statements of Cash Flows, page F-13
7.We note your response to prior comment 5 and reissue our comment in part.
Please provide us a fulsome response that includes references to the authoritative literature
that supports your accounting for these cash flows within operating activities, instead of
investment activities.  Further, quantify for us the amount of purchases and sales of digital
assets held for each of the years presented. In addition, other than the cryptocurrencies
seized by the government authorities, tell us how long you held each significant
cryptocurrency in each period presented.
Note 3. Summary of Significant Accounting Policies
Revenue Recognition
Cryptocurrency Mining, page F-30
8.We note your response to prior comment 8 and reissue our comment in part.  Please
provide us a fulsome response with a detailed analysis of your cryptocurrency mining
revenue recognition accounting policy that addresses the following:
•Tell us the authoritative literature that supports your accounting, specifically for the
following:oExplain your consideration as to whether the provision of storage capacity to
mine Filecoin is a lease under ASC 842;
oTell us how measuring the cryptocurrencies received at the fair value on the
date received is consistent with the guidance in ASC 606-10-32-21 to value that
consideration at contract inception;
oTell us how the global cryptocurrency information platform "Feixiaohao" can be
your principal market, or in the absence of a principal market, the most
advantageous market under ASC 820-10-35-5 when it appears that it is not a

 FirstName LastNameShi Qiu
 Comapany NameMercurity Fintech Holding Inc.
 September 22, 2023 Page 4
 FirstName LastNameShi Qiu
Mercurity Fintech Holding Inc.
September 22, 2023
Page 4
market where cryptocurrencies can be bought and sold; and
oTell us what portions of the consideration you are due is variable, how you
made such determination and how you apply the variable consideration
constraint under ASC 606-10-32-11.
•We note that both Cologix service orders filed as Annex 8.2 are signed by both
parties on October 1, 2022, but each references prior service orders which these
replace.  Please confirm the inception date for these Filecoin data center services,
explain the nature of the prior service orders, and provide the prior contracts if
necessary.
•Provide us your contract with the Filescan platform as we were unable to access the
contract terms through the internet link provided in your response. Tell us:oWhether Filescan is a mining pool operator or whether you mine Filecoin
directly on the Filecoin network through Filescan;
oThe mechanics of how a Filecoin is mined on the Filecoin network including
how you provide computer storage to mine Filecoin; and
oWhether you pay any fees to a Filecoin mining pool operator or sharing mining
service provider, and if so, tell us how you account for the fees.
•As the Carpenter Creek/Bitdeer contract was for the six months of October 2021 to
April 2022, and your response indicates the Bitcoin sharing business suffered a large
loss in 2021, please revise to include quantified disclosure of the 2021 Bitcoin loss.
Consultation Services, page F-31
9.We note your response to prior comment 9 and reissue our comment in part.  Please
provide us a fulsome response regarding the customer not being obligated to pay your $3
million "incentive" fee if their initial public offering is not completed that includes the
following:
•Tell us why over time recognition is appropriate under ASC 606-10-25-27 through
25-29 or why the fee you recorded is not considered variable and constrained under
ASC 606-10-32-11; and
•Clarify how you determined that the $80,000 consultation service revenue you
recognized in 2022 represents 50% completion of the consulting agreement.
Technical Services, page F-31
10.We note your response to prior comment 10 and reissue our comment in part.  Please
provide us a fulsome response regarding the following:
•Reference for us the authoritative literature you rely upon to support your accounting
for your software development services and also your other services;
•For contracts with both software development and other services, tell us how you
identify the different performance obligations and how you allocate arrangement
consideration to each performance obligation; and
•Please revise your disclosure to quantify and discuss the nature of your significant
revenue over the periods presented.

 FirstName LastNameShi Qiu
 Comapany NameMercurity Fintech Holding Inc.
 September 22, 2023 Page 5
 FirstName LastNameShi Qiu
Mercurity Fintech Holding Inc.
September 22, 2023
Page 5
Share-based payments, page F-33
11.We acknowledge your response to prior comment 11.  Please revise your proposed
disclosure to be included in future filings to address the following:
•Revise your disclosure about awards with market conditions to add a sentence that
indicates that compensation cost is not reversed if a performance condition is met but
a market condition is not met. See ASC 718-10-30-14; and
•Revise your disclosure about the estimation of forfeitures to clarify that you have a
policy election as to whether to estimate forfeitures or recognize them when they
occur. In this regard, the fourth paragraph of your proposed disclosure indicates that
ASC 718 requires the estimation of forfeitures. See ASC 718-10-35-3.
Segment Reporting, page F-34
12.We note your response to prior comment 12 that includes ASC 280-10-50-41 geographic
information.  Please revise your disclosure in future filings to provide the following:
•Your revenue and asset information for the same periods that your income statement
and balance sheet are presented. In this regard we note that your revenue information
is not provided for the year ended December 31, 2020;
•The entity wide long-lived asset information required by ASC 280-10-50-41b. In this
regard, we note that you provide only cryptocurrency information and exclude your
property and equipment;
•The major customer information required by ASC 280-10-50-42, including the total
revenue from each customer that provided 10% or more of your revenues for each
period presented.  We note your disclosure on page 5 that the loss of any one of your
customers could have an adverse impact on your revenue; and
•As your Hong Kong subsidiary revenue is material, separately disclose this individual
foreign country, as required by ASC 280-10-50-41(a).
Note 9. Intangible Assets, Net, page F-40
13.We have reviewed your response to prior comment 16. Please provide us an accounting
analysis citing specific authoritative literature that supports your determination to (A) not
derecognize the seized cryptocurrencies you did not control on your balance sheet at
December 31, 2022 and (B) recognize a recovery prior to such recovery occurring.  As
part of your analysis,
•Clarify whether the asset you had at December 31, 2022, was a crypto asset or a right
to recover crypto assets.  If it is a right to recover crypto assets, clarify whether that
right is to recover the quantity of crypto assets seized or alternatively a fiat currency
amount and how such fiat currency amount would be determined;
•Demonstrate how the specific authoritative literature on which you reply supports not
derecognizing the crypto assets you did not control (i.e., those seized by the Public
Security Bureau) at December 31, 2022 because the Recovery Proceeding had not yet
concluded;
•If you believe ASC 450 Contingencies applies, tell us why and how you applied the

 FirstName LastNameShi Qiu
 Comapany NameMercurity Fintech Holding Inc.
 September 22, 2023 Page 6
 FirstName LastName
Shi Qiu
Mercurity Fintech Holding Inc.
September 22, 2023
Page 6
guidance in this circumstance given that the seizure and loss of control has already
occurred. In addition, tell us whether your accounting contemplates the price
volatility of the crypto and explain whether there are circumstances where price
volatility represents an additional loss or contingent gain and the reasons why;
•Explain why the seizure of the Company’s safe and its contents as well as the transfer
of cryptocurrency to a wallet not controlled by the Company is not contradictory
evidence to the Company’s assertion of recovery; and
•Clarify for us whether you recognize impairment of the seized crypto assets you have
not derecognized whenever their carrying value exceeds their fair value and how your
accounting for impairment interfaces with the authoritative literature on which you
relied to not derecognize the seized crypto assets.
14.We acknowledge your response to prior comment 17 and your intent to reconsider the
nature of USD Coins and record them as financial instruments if you are able to regain
control of them. We note that you should have accounted for USD Coins as financial
assets prior to their seizure by the Public Security Bureau. Acknowledging that we still
have questions about the accounting for your seized cryptocurrencies in the preceding
comment, please address the following:
•Tell us how you intend to account for USD Coins as financial assets and reference for
us the authoritative literature you rely upon to support your accounting. Clarify in
your response whether you will elect any optional accounting;
•Tell us how you intend to present the USD Coin financial asset prior to its seizure on
your December 31, 2021 balance sheet; and
•Tell us how you intend to correct the error in your accounting for USD Coins as an
indefinite-lived intangible asset prior to its seizure.