Key Takeaways
The probe on money laundering started after an increase in deposits totaling more than 10 million yuan hit a local bank.
Chinese authorities confiscated a total of 130 million Chinese yuan ($18.6 mln).
Chinese police have arrested 63 people for allegedly laundering 12 billion yuan (US$1.7 billion) for domestic and foreign criminal groups using cryptocurrency. As per the official statement, the probe on money laundering started after a concerning increase in deposits totaling more than 10 million yuan hit a local bank.
A total of 130 million Chinese yuan, approximately $18.6 million, were confiscated by Chinese authorities as a culmination of several raids. The Chinese authorities said two of the suspects had fled to Bangkok, Thailand, but were later persuaded to return to China. Reportedly, from May last year, the group allegedly used the proceeds from illicit sources, such as gambling and pyramid schemes, and converted them into the tether stablecoin.
According to Chinese authorities, the criminal gang organized the group on Telegram, recruiting people who would open crypto exchange accounts. These exchanges were likely overseas owing to China’s harsh crackdown on cryptocurrency. Following the creation of the accounts, the gang would then give members a commission based on how much they could successfully launder, converting the USDT back into Chinese yuan.
The latest development comes amid reports that China’s digital yuan has been welcomed well by users. As of August 31, transactions using China’s digital yuan surpassed 100 billion yuan ($13.9 billion).
Recently, Chinese regulators have increased the country’s crackdown on crypto and digital assets with a blanket ban on all crypto transactions and crypto mining. Despite the ban, underground crypto operations and mining continue in China using proxy servers and VPNs. Mainland China remains East Asia’s largest cryptocurrency market in terms of transaction turnover and ranked fourth worldwide, according to a new report, despite the ban.
Ten Chinese agencies, including the central bank and banking, securities, and foreign exchange regulators, have been working together to root out “illegal” cryptocurrency activity in the country. This also comes amid reports that crypto money laundering has been surging with each passing year.
According to analytics firm Chainalysis, criminals laundered $8.6 Billion of cryptocurrency in 2021, up by 30% from 2020. In 2021 Chinese police arrested more than 1,100 people suspected of laundering money via cryptocurrencies.
