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Six people arrested in connection with cryptocurrency money laundering scheme in northeast China, amid focus on cryptocurrency capital flows.
Police in northeast China’s Jilin province have arrested six people in connection with a money laundering case involving the movement of 2.14 billion yuan ($296 million) in cryptocurrency to South Korea.
Jin and Shen, the surnames of two suspects, were allegedly carrying out illegal currency exchange business, according to a statement released by Panshi city police, the official China News news service reported Friday.
Some people were defrauded, according to police, who did not identify the cryptocurrencies used in the scheme.
Law enforcement became aware of the scheme when bank accounts bearing the suspects’ names showed “significant [daily] transactions” involving a “large number of customers”. The activity had the characteristics of an illegal underground bank, according to police.
Police said the criminal group used bank accounts in mainland China to receive funds, which were then used to purchase cryptocurrency on over-the-counter exchanges. Crypto could then be used to facilitate foreign currency exchange for cross-border businesses, such as e-commerce companies and other import and export businesses.
Mainland China maintains a strict ban on cryptocurrency trading activity because Beijing has long viewed it as a threat to financial stability. The central government also exercises strict foreign exchange controls to address problems of capital flight.
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Is cryptocurrency too risky for China?
Is cryptocurrency too risky for China?
Many companies in the sector have since moved much of their remaining operations out of mainland China. Exchanges have also apparently stopped serving mainland users, although some like Binance has kept workarounds simple which are widely shared online. Peer-to-peer cryptocurrency trading remains a legal gray area, mainland China saw $86.4 billion in cryptocurrency transactions from July 2022 to June 2023 – most of which took place via over-the-counter or gray market channels, via peer-to-peer services, according to blockchain analytics firm Chainalysis. In recent years, Beijing has stepped up its efforts in the fight against cryptocurrencies. money laundering related. Last December, Chinese prosecutors and foreign exchange regulators released statement pledging to crack down on the use of cryptocurrencies for illegal currency trading, with a particular focus on cases involving Tether. In 2022, the police of the Northern Inner Mongolia Autonomous Region arrested 63 people in connection with the laundering of 12 billion yuan through the use of cryptocurrency.
However, the overall volume of money in crypto-related money laundering cases has declined recently. Illicit addresses sent $22.2 billion worth of cryptocurrencies in 2023, a 29% decrease from the $31.5 billion sent in 2022, according to Chainalysis. Commercial activities “both legitimate and illicit” saw an “overall decrease” during this period, the company said.