Chinese police bust illegal cryptocurrency transaction worth $296 million

Chinese police have identified a so-called “underground bank” providing illegal currency conversion services. Within the framework of which, through digital assets, the illegal exchange of Chinese yuan and South Korean won was carried out for a total of $295.8 million.

Local news outlets reported that six people were detained in northeast China's Jilin province. Many bank cards and other items used for criminal activities were confiscated from the detainees.

According to law enforcement agencies, the detainees participated in an illegal currency transaction, using internal bank accounts to receive and send funds. They used over-the-counter digital asset trading, won settlements and other transactions to facilitate cross-border online trading for Korean intermediaries.
The police emphasized that criminals exploited the features of cryptocurrencies, such as anonymity of transactions, decentralization and the possibility of unhindered cross-border transfers.

The investigation began after the discovery of an abnormal flow of daily transactions through the bank accounts of two suspects, which included a variety of counterparties. This violation was typical of underground banking operations.

In December 2023, the Supreme People's Procuratorate of China issued a statement declaring that Tether's stablecoin USDT is illegal to use in cross-border foreign exchange transactions, highlighting the strictness of the regulation. In August of that year, a Chinese national was sentenced to nine months in prison for purchasing approximately $13,000 worth of USDT.

Despite the bans, China's underground cryptocurrency market continues to thrive, as the WSJ reported in January 2024.
This news once again highlights the risk of being involved in the laundering of illegal funds of any crypto user, and AML verification of one’s counterparties is becoming increasingly relevant.

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