The Yuecheng District Prosecutor’s Office in Shaoxing City, Zhejiang Province, has investigated a case involving the use of digital yuan (e-CNY) accounts for cashing out and laundering money, according to local media reports.
A group of four individuals located merchants accepting the central bank digital currency (CBDC) and arranged to exchange a certain amount of digital currency for cash. The merchants received a commission of 1-1.5%.
One of the arrested individuals, named Yuan, explained that he found an online offer to earn money through such operations. He received 0.8% of the funds circulated.
To scale the operation, Yuan involved his girlfriend and a friend, paying them 0.5%. Details about the fourth person involved in the case have not been disclosed.
In just four days in September 2023, the group cashed out over 200,000 e-CNY (~$25,255).
According to Yuan, he did not consider the origin of the money. The report states that transactions in digital yuan are strictly confidential, and foreign criminal groups exploit this feature for money laundering.
To conceal their activities, and due to the limited number of merchants dealing with digital yuan, the group traveled to neighboring cities to find them. Law enforcement was alerted by abnormal e-CNY flows through the accounts of certain merchants in Shaoxing, leading them quickly to Yuan and his accomplices.
The court sentenced the individuals to prison terms ranging from 16 to 19 months and imposed fines for laundering proceeds from criminal activities.
In May, the Hong Kong Monetary Authority and the People’s Bank of China announced the expansion of the e-CNY programme in the autonomous region.