China Arrests Gang Members Involved In $5.6 billion Crypto Fraud

• • China arrested 93 members of a criminal group.
  • The group allegedly laundered $5.6 billion using virtual currencies.

In the latest news on crypto fraud, China has arrested 93 suspects of a criminal group who are said to have laundered up to US$5.6 billion using virtual currencies. The police raided ten locations of the members and took hold of more than 100 computers and smartphones and froze an equivalent of about $40 million.

China police accused the group of buying cryptocurrencies with illegal funds since 2018. Once the dirty money is taken from telecom fraud schemes and gambling they would convert it to U.S dollar and send it to overseas accounts. Authorities have recovered only a million dollars of the stolen money.

Hong Mou, the leader of the group is suspected to be behind more than 300 cases of telecom fraud. According to a report by Chainanalysis, cybercriminals move their illegally got money to a service where they can be kept away from the authorities and then eventually convert it to cash.

That’s why money laundering underpins all other forms of cryptocurrency-based crime. If there’s no way to access the funds, there’s no incentive to commit crimes involving cryptocurrency in the first place. Reads the report.

Cybercriminals have laundered cryptocurrency worth over $33 Billion between 2017 and 2021. Last year about $8.6 billion was laundered, and this was a 30% increase in money laundering activity over 2020. The Chinese government did solve nearly 260 cases of crypto-related money laundering and seized cryptocurrencies worth more than $1.5 billion, despite the country not having a clear strategy to stop money laundering using digital currencies.

The share of global Bitcoin trading volume in China has dropped notably, says the country’s central bank. However, authorities continue to crack down on cases involving money laundering using virtual currencies. So far, China has cracked down on illegal fund-raising, filing 25,000 cases in the past five years.

Is China winning the war against crypto?

The People’s Bank of China (PBOC)  says its efforts to do away with Bitcoin transactions for financial stability are finally paying off. China’s central bank sees virtual currency transactions as a threat to the nation’s financial security and capital controls.

The Bureau said that China’s global Bitcoin transactions fell to 10% in March, this was a massive drop from its peak of 90% back in 2017. The country’s central bank said it’s taking the measures further by stating that cryptocurrencies and peer-to-peer (P2P) transactions are threats to the banking industry.

Last year, China banned all cryptocurrency trading and mining activities. In April, China banned using NFTs (non-fungible tokens) as financial assets. China banned initial coin offerings (IPOs) five years ago. Regardless of it all, China is still in the top ten countries within the Global Cryptocurrency Acceptance.