Chinese Authorities Crack Down on $5.6B Crypto-Related Money Laundering
Authorities in China’s Hunan province have recently busted a criminal group that used cryptocurrency to launder 40 billion yuan ($5.6 billion). The trade of digital currencies was banned in the country last September.
Police in Hengyang, a county in China’s southern province of Hunan alleged that the criminal group had been buying cryptocurrencies with illicit funds since 2018, which were then traded for US dollars at a profit. The dirty money reportedly originated from telecom scams or gambling.
Police have arrested 93 related suspects across the country, frozen about 300 million yuan involved in the case, and recovered financial losses of 7.8 million yuan for the victim. The case is still undergoing further developments.
According to Chinese media outlet Blue Whale Finance, a large number of Binance accounts that were frozen in August are connected to the recent Hunan case. Binance declined to comment on the legal matter, saying that it cooperates with regulators and law enforcement around the world to protect the ecosystem and the safety of all users. Law enforcement authorities in most jurisdictions will require direct contact with the user if the account is in violation of the law, it continued. Binance also said it will continue to improve its law enforcement support system and deal with the matter in accordance with the judicial process.
In recent years, many cases of crypto-related money laundering have emerged in China. According to the country’s Ministry of Public Security, in 2021, in view of the illegal channel of virtual currency money laundering, public security organs nationwide have cracked 259 related cases, freezing virtual currency worth more than 11 billion yuan.
In April this year, Liu Zhongyi, director of the criminal investigations bureau of China’s Ministry of Public Security, said at a press conference that with the deepening of the crackdown, telecom fraud crimes have exhibited various changes and new characteristics. From the perspective of capital channels, the proportion of traditional three-party payment and money laundering to corporate accounts has been reduced. The use of digital currency for laundering, especially USDT, is the most serious harm.
On September 26, the People’s Bank of China (PBoC) announced that the share of global Bitcoin trading volume in China has dropped significantly as the government continues to crack down on speculation in domestic virtual currency trading. The country has also cracked down on illegal fund-raising, filing 25,000 cases in the past five years.
Chinese authorities believe that virtual currency trading speculation disturbs economic and financial order, spawns gambling, illegal fundraising, fraud, pyramid schemes, money laundering and other illegal activities. Over the years, the government has continued to intensify its crackdown. In September 2021, the PBoC issued a notice on further preventing and dealing with speculation risks associated with virtual currency trading, banning services related to virtual currency settlement and providing traders’ information.
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Many countries around the world are also cracking down on crimes such as money laundering through digital currencies. In February, US authorities arrested two individuals on suspicion of laundering billions of dollars from cryptocurrency trading platform Bitfinex. India’s Enforcement Directorate said in August that it had frozen 646.7 million rupees in bank assets of WazirX, India’s largest cryptocurrency exchange, because the exchange actively assisted about 16 fintech companies by engaging in money laundering through the purchase of crypto assets.