Hong Kong arrests four over $113m cryptocurrency money-laundering scheme

Hong Kong Customs arrested four suspects in cryptocurrency-based money laundering in what is the first such investigation, according to the South China Morning Post.

It is alleged that the syndicate laundered illegal funds totaling HK$1.2 billion (approximately $154 million), mainly through the stablecoin USDT from Tether.

Senior superintendent of the Joint Organized Crime Investigations Bureau Mark Wu Wai-kwan clarified that the group carried out financial operations over 15 months through shell companies, using 40 cryptocurrency wallets for USDT.

“Our investigation showed that the syndicate laundered about HK$880 million (approximately $113 million) using cryptocurrency between February 2020 and May 2021,” he said.

The remainder was moved through traditional channels.

Authorities arrested the group’s 33-year-old ringleader and three participants aged between 24 and 36.

According to the customs officer, the laundered funds were transferred to the bank accounts of individuals and companies in Hong Kong, Mainland China and Singapore. The suspects charged clients a fee of three to five percent.

Mark Wu Wai-kwan noted that the cryptocurrency-related investigation was the first of its kind in Hong Kong.

He added that the use of digital assets made it harder to trace the suspects’ transactions.

Earlier, Chainalysis analysts found that Chinese residents use USDT to move capital abroad due to government-imposed limits.

In the People’s Bank of China they warned of risks and threats to the monetary, payment and settlement systems that stablecoins may pose.

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