Chinese Authorities Uncover $295 Million Cryptocurrency Laundering Scheme

Chinese police have uncovered an underground banking scheme that utilised digital assets for the illicit exchange of yuan and South Korean won amounting to $295.8 million.

Local media reported the arrest of six suspects in Jilin province in the northeast of the country. Authorities seized numerous bank cards and other “criminal tools” from the suspects.

According to law enforcement, the criminal group was engaged in illegal currency operations, using domestic accounts to receive and transfer funds.

They resorted to over-the-counter trading of digital assets, transactions in won, and other methods, aiding Korean purchasing agents in conducting cross-border online trade.

Police representatives noted that the perpetrators exploited inherent features of cryptocurrencies such as transaction anonymity, decentralisation, and unimpeded cross-border transfers.

The “clue” for law enforcement was an abnormal daily transaction flow through the accounts of two suspects, involving various counterparties. According to guidelines, such activity aligns with the characteristics of underground banking.

In December 2023, China’s Supreme People’s Procuratorate issued a notice declaring the use of Tether’s USDT stablecoin in cross-border currency operations illegal. In August, a citizen of the country received a nine-month prison sentence for purchasing the asset for ~$13,000.

Back in January 2024, WSJ reported on the thriving underground cryptocurrency market in China, despite the previously imposed ban.