China has recently become a hotbed of illicit crypto trade. The country has earned a great reputation in the international community when it comes to scams and illegal activities involving cryptocurrencies.
Recently, there have been a number of nefarious activities originating in the country or involving Chinese nationals.
For example, in June 2021, more than 200 victims from at least 20 countries lost $70 million to scammers who disguised themselves as beautiful and sexy Chinese women who convinced them to invest in crypto.
In January of this year, Chainalysis published a report disclosing Chinese crypto investors who lost $2.8 billion due to notorious carpet-rolling. Eight people were arrested in the fraud.
Last July, unidentified Chinese nationals were arrested after being involved in a forgery of loan applications in India that also involved digital currencies.
But perhaps taking the cake in these scams is the recent dismantling by Chinese police of a four-year operation of criminal gangs that was responsible for laundering $5.6 billion in crypto.
The large-scale money laundering gang ‘9.15’
Led by one Hong Mou, the “9.15 gang” is said to be behind more than 300 wiretrafficking incidents involving various payment and collection sites across China.
The group, in operation since 2018, also facilitated the collection of illicit funds from fraud, gambling and other crypto-related activities in US dollars to eliminate traces of illegality.
Using the cryptocurrency, Mou’s group was able to launder 40 billion yuan, which translates to roughly $5.6 billion, according to Chinese authorities.
Following the crackdown, 93 suspects were arrested and more than 100 computers and mobile phones used by gang members were confiscated.
Funds amounting to 300 million yuan were also frozen in accordance with the case. The gang’s successful takedown also resulted in the recovery of 7.8 million yuan of financial losses from various victims.
Cryptocurrency: The Dark Side
While it can be considered a victory for the authorities, it certainly puts the asset class in a negative light again.
Over the past few years, countries like the US and Europe have taken strict measures to regulate crypto as an alternative means of financing for their citizens.
One of their compelling arguments is that cryptocurrencies can be used for illicit activities and these types of assets are difficult to trace, at least to some extent, making them an attractive tool for money laundering and other related crimes
Meanwhile, the Chinese authorities are already processing a criminal case for the arrested suspects and Mou.
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