China Detains 63 People for $1.7 Billion in Crypto Money Laundering

Key Takeaways

• An investigation into possible instances of money laundering was initiated when a local bank noticed an uptick in deposits reaching more than 10 million yuan.
• The entire amount of money the Chinese government seized is equal to $18.6 million USD.

The Chinese authorities have arrested 63 persons on suspicion of utilizing cryptocurrencies to launder 12 billion yuan (US$1.7 billion) on behalf of both domestic and international criminal organizations. An alarming spike in deposits at a local bank that amounted to more than 10 million yuan prompted the government to investigate possible money laundering, as stated in the official announcement.

Following a series of raids, Chinese police were able to seize a total of 130 million Chinese yuan, which is equivalent to around $18.6 million in American currency.

According to the Chinese authorities, two suspects had escaped to Bangkok, which is located in Thailand; nevertheless, they were eventually convinced to return to China. Reportedly beginning in May of the previous year, the gang allegedly utilized the profits obtained from illegal activities, such as betting and MLM schemes, and turned them into the stablecoin known as the tether.

Criminals Operating Through Telegram Groups

The Chinese authorities believe that the criminal gang created the group on Telegram to recruit individuals who would open accounts on cryptocurrency exchanges. Because of China’s severe prohibition on bitcoin, these exchanges most likely took place outside of the country. After the accounts were set up, the gang would then pay members a fee based on the amount of money they were able to effectively launder by converting USDT back into Chinese yuan.

The most recent development takes place in the midst of news that people have shown positive reception to China’s digital yuan. As of the 31st of August, the total value of transactions made utilizing China’s digital yuan has topped 100 billion yuan, which is equivalent to $13.9 billion.

Chinas Anti-Crypto Stance

Recently, Chinese policymakers have strengthened the country’s crackdown on cryptocurrencies and digital assets by imposing total ban on all crypto minings. This is part of China’s ongoing effort to rid the country of cryptocurrencies and digital assets.

Despite the ban, illicit cryptocurrency operations and mining are still taking place in China through the use of proxy servers and virtual private networks (VPNs). Mainland Despite the ban, China has the largest cryptocurrency market in East Asia in terms of transaction turnover, and it is ranked fourth globally, according to a recent report. China is also ranked fourth in the globe.

Ten different government departments in China, including the country’s central bank, and banking/securities/foreign exchange regulators, have been collaborating in an effort to eradicate “illegal” cryptocurrency activities in the country. This also comes amid claims that the use of cryptocurrencies for illegal purposes has been on the rise over the past few years.

In 2021, thieves cleaned $8.6 billion worth of cryptocurrencies, which is a 30% increase from the amount they cleaned in 2020, as reported (1) by the analytics firm Chainalysis. More than 1,100 persons were taken into custody by the Chinese police in 2021 on suspicion of using cryptocurrency to launder money.