Group Arrested in China for Laundering $1.7 Billion in Cryptocurrency – This is What Happened

Police in China arrested 63 people accused of laundering ¥12 billion ($1.72 billion) via crypto.

The Public Security Bureau of Inner Mongolia’s Tongliao city in northern China stated that starting from May 2021, this criminal group converted the proceeds from illicit sources – including pyramid schemes, fraud, and gambling – into the major stablecoin Tether (USDT).

Furthermore, the funds were distributed across multiple crypto accounts, which the suspects allegedly used to convert the money back into Chinese yuan.

The statement said that the group used Telegram, an app blocked in China, to recruit people across the country to work for them. These individuals would then open crypto accounts used to launder the funds, the police said. Each participant in this scheme received a commission based on the number of crypto transactions they processed.

‘Crypto as a physical barrier’

The organization had a clear division of labor, said the authorities. After each money laundering operation, gang leaders, team leaders, cashiers, bottom-level money launderers, and individuals at other levels would receive commissions in different proportions.

An officer described as “the relevant person in charge” was quoted in the statement, saying that laundering money through digital currency is a relatively new method, and it makes handling cases more difficult. 

“Since buying digital currency anonymously and then selling it is equivalent to setting up a physical barrier, there is no way to track the flow of funds or find the recipient through traditional means, and the tracking and retrieval of digital currency are also very complicated.” 

The person further said that obtaining evidence, in this case, was difficult but that the police managed to solve it through multiple methods such as interrogation of the individuals involved, investigation of overseas crypto exchanges, and tracing blockchain records.

It was discovered that this criminal organization had been helping both domestic and foreign criminal groups to launder money by using digital currency transactions and exchanges. 

An $18.6 million-heavy case

Per the statement, the Public Security Bureau was alerted when they noticed that one of the suspects had a monthly transaction volume of  ¥10 million ($1.44 million) in his bank account, prompting an investigation into “suspected money laundering crimes.” 

More than 200 police officers were dispatched to 17 provinces, autonomous regions, and municipalities. Two of the suspects had fled to Bangkok, Thailand, but they were persuaded to return to China. 

The authorities said that more than ¥130 million ($18.6 million) worth of proceeds was confiscated from the group, and more than 10 money laundering dens were destroyed. 

China is in the middle of the latest crypto crackdown, and this one is only the latest in a string of crypto-related arrests. In March, police in Shanghai took down a pyramid scheme that involved crypto worth more than ¥100 million ($14.3 million). In September, police in Hengyang, Hunan province, arrested 93 people involved in a ¥40 billion ($5.73 billion)-heavy money laundering scheme. 

Meanwhile, as reported last week, Tether, the company behind USDT, expanded its offerings to include offshore Chinese Yuan (CNH₮) stablecoin on the Tron blockchain. The move has enabled Chinese customers to send and receive payments in the stablecoin.

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Learn more: 
– ETH Hacker Gets 10 Year Jail Term, But BTC Theft ‘May Not Be Criminal’ in China
– Court in China Determines That NFTs Represent Virtual Property and Are Protected by Law

– Beijing: Digital CNY Will Tread Line Between Ensuring Privacy and Fighting Crime
– Chinese Web Censor Resolves to Keep Cracking Down on Crypto After Closing 12K Social Media Accounts