China Cracks Down a $5.6 Billion Crypto Money-Laundering Scheme (Report)
Law enforcement agents from Hengyang (a city in the southern Chinese province Hunan) have reportedly busted a criminal group that employed cryptocurrencies to launder 40 billion yuan (approximately $5.6 billion).
Over the past several months, China’s authorities halted numerous similar schemes, arresting thousands of people.
The ‘Hundred-day Action’
According to a local coverage, the Chinese police arrested 93 individuals in the city of Hengyang on suspicion of laundering around $5.6 billion using digital assets. The authorities raided 10 physical sites, seized more than 100 electronic devices, and froze about $42 million in an operation called the “Hundred-day Action.”
The gang allegedly purchased digital assets with illegal funds and later converted them into American dollars to launder profits. The police claimed that the source of the money came mainly from gambling and telecom scams.
China is not a place where cryptocurrency activities could thrive. Over the years, the domestic government has made it clear that it does not support the industry and contemplated imposing harsh measures. The adverse stance peaked in September 2021 when the People’s Bank of China (PBoC) banned all operations with digital assets on local soil.
Despite the restrictions, the residents of the world’s most populated nation remain interested in the asset class. A recent Chainalysis research estimated that China ranked in the top 10 among the global leaders in cryptocurrency adoption.
In June last year, the Chinese police arrested 1,100 individuals who allegedly employed digital currencies to launder funds for telecommunications network fraudulent activities. In addition, the authorities detained 170 criminal organizations related to the scheme.
In March 2022, the Shanghai Public Security Bureau and the Yangpu Public Security Bureau conducted a joint investigation on pyramid schemes using digital assets. As a result, they halted an online platform that conned investors for nearly $16 million during its existence.
The police highlighted the operation, saying it was the first cracked cryptocurrency pyramid scheme in the history of Shanghai.
“The general public should raise awareness of risk prevention and consciously resist pyramid schemes. The Shanghai Public Security Economic Investigation Department will also continue to crack down on economic crimes that endanger the legitimate rights and interests of citizens and effectively protect the legitimate rights and interests of consumers,” the authorities stated.
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I’m a journalist who specializes in investigative reporting and writing. I have written for the New York Times and other publications.