Trial begins in China against prominent Bitfinex and Binance investor

The Xihu District Court in the Chinese city of Hangzhou began hearing the case against Zhao Dong, a prominent over-the-counter cryptocurrency trader and investor in Bitfinex, Tether and Binance. He faces up to three years in prison, according to The Block.

Dong is accused of “facilitating online criminal activity”.

Under Chinese law, the offense is defined as providing information technology services to a person known to be committing crimes online. If found guilty, the penalty is up to three years’ imprisonment and a monetary fine.

The case is believed to be connected to a platform engaged in money laundering, with turnover estimated at 50 billion yuan (~$7 billion). The trader and other defendants are accused of providing counterparty services for transactions. Such schemes enable users to earn by providing their bank accounts and payment-system accounts for mixing fiat payments and money laundering.

From the second half of 2019, the platform’s team began using Tether (USDT) to improve transaction-mixing and evade authorities’ scrutiny.

The Zhao Dong case has drawn attention from the crypto community, as he has been active in the industry since the early 2010s. For several years he led one of the largest OTC platforms in China. Dong is a major shareholder of Bitfinex, Tether, Binance and the founder of the p2p crypto-lending platform RenrenBit.

Earlier reports said Zhao Dong was detained in July 2020; RenrenBit called the information fake. However, reporter Colin Wu confirmed the trader’s arrest.