Impending Crackdown on Crypto Crime in China
Chinese authorities have recently dismantled an extensive underground banking network, leading to the arrest of 193 suspects involved in illicit businesses using cryptocurrencies, particularly Tether (USDT). The crackdown exposed unlawful transactions amounting to approximately 13.8 billion yuan (~$1.9 billion).
How Chinese Authorities Are Combating Crypto Crimes
- The investigation commenced in November 2022 after authorities flagged suspicious activities linked to underground banks in Chengdu’s Longquanyi District.
- A specialized task force comprising experts from various police departments, including economic investigation, cyber security, and legal affairs, was formed to address the issue.
These underground banks provided unauthorized foreign exchange settlements, allowing them to circumvent national regulations.
Efforts to Combat Criminal Syndicates
- On June 1, 2023, following directives from the Ministry of Public Security, coordinated raids were conducted in major cities such as Shanghai and Shenzhen, resulting in the arrest of key figures like Lin, Weng, and Chen, along with 25 others.
- Law enforcement seized numerous bank cards and digital payment tools linked to criminal activities during these raids.
The syndicate had been exploiting its import and export business since January 2021 to facilitate illegal activities, utilizing USDT to conduct transactions outside official foreign exchange channels for international fund transfers.
Complexity of the Criminal Network
Zhong Yu, captain of the Eighth Brigade of the Economic Investigation Detachment at the Chengdu Municipal Public Security Bureau, emphasized the intricate nature of the network.
“The suspect settled funds through underground banks and was suspected of engaging in illegal foreign exchange criminal activities,” Yu stated.
Recent Arrests and Challenges in Unregulated Environments
- Recent reports highlighted the arrest of six individuals by the Chinese government allegedly involved in illicit crypto transactions worth $295 million, underscoring the risks associated with cryptocurrencies in unregulated settings.
- In a separate incident, Hong Kong police apprehended three men at a currency exchange shop for engaging in a deceptive transaction using Tether’s USDT.
The suspects deceived a customer by displaying ceremonial “hell money,” convincing him to transfer approximately $128,073 worth of USDT before reneging on the cash exchange agreement.
Hot Take: Stay Informed to Navigate Crypto Risks
It is essential for crypto enthusiasts to stay informed about the evolving landscape of regulations and crackdowns to avoid falling prey to unlawful activities. By remaining vigilant and adhering to compliance measures, you can mitigate risks associated with crypto transactions.
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