Last Thursday, June 10, the police authority in China arrested over 1,100 people allegedly using cryptocurrency to operate money laundering schemes through telephone calls and online scamming.
The Ministry of Public Security said in a statement published on their official website on June 9 that the authorities went through 23 provinces and cities around China and caught 1,100 people who were sorted into 170 groups.
Initially, the people involved used bank accounts to scam but these accounts have been terminated by the banks. To continue their operations, they hired other people to use their own bank accounts on digital currency platforms and convert one asset to another.
Additionally, the Ministry of Public Security revealed that the suspects have a WeChat group where their clients, who are also involved in the crime are charged with a 1.5% to 5% commission to convert the illegal money into cryptocurrency.
Moreover, China’s Payment & Clearing Association stated that the illegal activities related to digital currency are dramatically increasing. As per the statement of the Ministry regarding cryptocurrency, the association said that ‘they have increasingly become an important channel for cross-border money laundering’.
In relation to the money laundering incident, gambling sites are suspected to be one of the reasons for the increase in illegal payment activities in China. About 13% of the gambling sites in the country support the use of digital currency.
China has stepped up in tracking down illegal crypto activities because of the Bitcoin price rally this 2021. Due to the sudden increase, the government is concerned about the possible loss that individual investors might suffer from the asset’s volatility. Fraud and money laundering are also the top illegal activities with the potential to impose huge trading losses in the market.
Back in 2019, China banned cryptocurrency trading, and recently, they are imposing strict restrictions on Bitcoin mining. As of today, word searches related to cryptocurrency are censored in China. Additionally, the country is in the middle of a clampdown on its fintech sector with large fines being imposed on cryptocurrency mining companies due to monopolistic practices.
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