Chinese Authorities Crack Down on $2.2 Billion Illegal Forex Scheme with Crypto Platforms Involved

Chinese Authorities Dismantle $2.2 Billion Illegal Forex Operation

Chinese authorities have taken down an illegal underground banking operation that facilitated the movement of $2.2 billion between China and other countries using overseas virtual currency trading platforms. The operation was exposed by China’s State Administration of Foreign Exchange (SAFE) on its WeChat account, revealing that the underground bank had been using crypto to bypass forex restrictions in China.

Using Crypto to Evade Restrictions

In China, citizens are not allowed to exchange more than $50,000 worth of foreign currency per year. However, crypto has been widely used to evade these restrictions. According to Xu Xi from SAFE, underground banks purchased virtual currencies and sold them through overseas trading platforms to acquire the necessary foreign currency.

Seizure of Cryptocurrencies and Bank Accounts

During on-site investigations, authorities confiscated cryptocurrencies valued at $28,000, including Tether (USDT) and Litecoin (LTC). The underground bank’s operation involved a network of a thousand bank accounts spread across 17 Chinese provinces and municipalities.

The Ban on Crypto in China

Mining and general use of cryptocurrencies are prohibited in China. Some experts speculate that the ban is primarily driven by the country’s capital controls implemented in 2016.

Hot Take: Crackdown on Illegal Forex Operations

Chinese authorities have successfully cracked down on an illegal underground banking operation that used cryptocurrencies to bypass forex restrictions. This highlights the ongoing challenges faced by governments in regulating the use of digital currencies for illicit activities. While crypto offers benefits such as borderless transactions, it also presents opportunities for money laundering and capital flight. As regulators continue to tighten their grip on the crypto industry, it is crucial for individuals and businesses to comply with existing laws and regulations to ensure the legitimacy and long-term viability of cryptocurrencies.