Chinese authorities have dismantled a $2.2 billion underground banking operation that utilized cryptocurrency trading platforms to evade the country’s stringent foreign exchange regulations.
Key Takeaways
- Chinese authorities dismantle a $2.2 billion underground banking operation employing cryptocurrency platforms to circumvent foreign exchange regulations.
- The illicit process involved purchasing virtual currencies, selling them on overseas platforms, and completing the conversion of yuan and foreign currencies, constituting illegal foreign exchange transactions.
- China’s strict regulations permit citizens to exchange only up to $50,000 in foreign currency annually, with transactions beyond this limit requiring a permit.
- Despite China’s ban on crypto exchanges since 2017, reports indicate continued underground operations, and global exchanges are indirectly onboarding Chinese clients.
$2.2 Billion Cryptocurrency Money Laundering
Chinese authorities have successfully dismantled an underground banking operation valued at $2.2 billion, exposing a sophisticated scheme that exploited cryptocurrency trading platforms to bypass the country’s stringent foreign exchange regulations. The illicit process involved the purchase of virtual currencies, followed by their sale on overseas trading platforms to obtain the necessary foreign currency.
Xu Xiao, Inspector at the Qingdao Branch of the State Administration of Foreign Exchange, clarified that this method completed the conversion of yuan and foreign currencies, constituting an illegal act of buying and selling foreign exchange.
China’s Strict Regulations and Crackdown on Crypto
China maintains strict rules concerning money transfers outside the country, allowing citizens to exchange only up to $50,000 in foreign currency annually. Transactions exceeding this limit without a permit are considered money laundering. During the recent investigation, authorities seized cryptocurrencies valued at approximately $28,000, including Tether and Litecoin.
China’s stringent stance on cryptocurrency is well-established, with a comprehensive ban on crypto exchanges implemented in September 2017. Subsequently, the country expanded its restrictions to include crypto mining and trading.
Indirectly Onboarding Chinese Clients
While mainland China continues to exhibit hostility toward cryptocurrencies, reports suggest that global crypto exchanges are indirectly onboarding Chinese clients.
China Busts $2.2B Money Laundering Ring Involving Crypto Platforms https://t.co/lMMU4skO9e pic.twitter.com/m0BL4lQCvr
— Janina Frabell (@FrabellJanina) December 27, 2023
The South China Morning Post recently accused Binance of facilitating Chinese crypto trading accounts by falsely representing them as originating from Taiwan.
To Conclude
The dismantling of a $2.2 billion money laundering ring in China underscores the persistent challenges posed by underground operations leveraging crypto platforms to evade strict foreign exchange regulations.
Despite China’s comprehensive ban on crypto exchanges, reports of continued illicit activities highlight the need for ongoing vigilance and regulatory measures.
