Chinese law enforcement recently arrested 63 people who allegedly used cryptocurrency to launder a total of 12 billion Chinese yuan or $1.7 billion. The suspects, allegedly part of a criminal gang, were arrested as part of Beijing's crackdown on digital currency trading.
Officers from the public security bureau (PSB) of Tongliao City in China's Inner Mongolia region were responsible for the arrest. In a statement, the Tongliao PSB said the gang allegedly started converting proceeds from pyramid schemes, fraud, gambling and other illicit activities into tether stablecoin tokens beginning May 2021. Tether tokens are pegged to the U.S. dollar.
Aside from the arrests, reports also mentioned that proceeds of at least 130 million Chinese yuan ($18.7 million) were seized. It followed an investigation that began in July 2022 and involved more than 200 police officers.
A local bank account owned by one of the suspects was used for monthly deposits of more than 10 million Chinese yuan in cash form. The Tongliao PSB was alerted due to the monthly transaction volume involved. Law enforcement added that two of the suspects had fled to Thailand, but were persuaded to return to China.
Quoting the Tongliao PSB, a CNBC report said the group used the messaging service Telegram to recruit people around the country. The group then used the app, which is banned in China, to communicate with unwitting accomplices to help launder funds using crypto accounts they opened. The recruits received a commission depending on the amount of money they laundered.
The gang was able to proceed with the criminal operations despite Beijing's attempts to wipe out crypto-related activities, including trading and mining. Chinese users have turned to overseas-based exchanges to trade cryptocurrencies, but this became harder as the crackdown from authorities intensified last year. (Related: China's crypto ban forces Bitcoin miners to sell out or flee overseas.)
Tongliao arrests followed similar efforts in 2021
A June 2021 report by Reuters stated that Chinese police arrested more than 1,100 people suspected of laundering illegally-acquired funds via cryptocurrencies. The said funds were obtained from telephone and internet scams.
According to the Ministry of Public Security, police had busted more than 170 criminal groups involved in using crypto to launder money as of June 9, 2021. The ministry said through its official WeChat account that the money launderers charged their criminal clients a commission of between 1.5 and five percent to convert illegal proceeds into virtual currencies through crypto exchanges.
A month before the arrests, three industry bodies in China banned crypto-related financial and payment services. Alongside this, the Chinese State Council vowed to clamp down on Bitcoin mining and trading.
The Payment and Clearing Association of China (PCAC) expressed concern over crypto's links to crime, arguing that the number of crimes involving the use of virtual currencies is on the rise.
In a statement, the PCAC explained that digital currencies "have increasingly become an important channel for cross-border money laundering" due to their anonymous, convenient and global nature. It added that crypto has already become a popular means of payment in illegal gambling activities, with nearly 13 percent of gambling sites supporting the use of virtual currencies. Blockchain technology had made it more difficult for authorities to track the money, the PCAC added.
Visit CryptoCult.news for more news about the use of crypto in criminal activities.
Watch this video about China's 2021 ban on crypto mining and trading.
This video is from the Morgan Report channel on Brighteon.com.
More related stories:
The COVID/crypto connection: The grim saga of FTX and Sam Bankman-Fried.
Russia to establish a national cryptocurrency exchange.
Crypto lender BlockFi blocks withdrawals as FTX declares bankruptcy.
Sources include:
Please contact us for more information.