China Dismantles Major Underground Crypto Network Worth $2.2 Billion

The Chinese crackdown on cryptocurrencies shows no signs of abating, as evidenced by the recent dismantling of a large-scale underground banking operation involving 2.2 billion dollars. This operation relied on crypto-assets to circumvent restrictions on financial flows. Here’s a look back at this extensive case, a symbol of the regime’s hostility towards virtual currencies.

Discovery of a Major Money Laundering Scheme in China

On December 24th, information circulating on Chinese social networks revealed that the foreign exchange police had uncovered a vast parallel banking network. This network allowed for capital movements to international destinations to be made through foreign crypto exchanges, bypassing Chinese controls.

The authorities estimate that this large-scale money laundering system facilitated the transfer of the equivalent of 2.2 billion dollars, relying on various stable cryptocurrencies such as Tether. In total, no less than 1000 bank accounts were involved in this sprawling case.

During their investigation, the Chinese authorities seized about 200,000 yuan worth of cryptocurrencies, which is roughly 28,000 dollars in Tether and Litecoin, according to inspectors. This crypto discovery proves the use of virtual currencies by this underground network, despite the ban in place in China.

Unrelenting Repression That Is Here to Stay

This operation is part of the zero-tolerance policy consistently applied by Beijing towards virtual currencies, perceived as a threat to the regime’s financial control. China has gradually tightened the screws: banning crypto exchanges in 2017, followed by a total prohibition of crypto-assets in the country in 2021.

Behind this repression is Beijing‘s resolute will to maintain control over financial flows and to curb money laundering. In March 2022, an investigation supposedly revealed that Binance was helping Chinese clients circumvent the crypto prohibition. Proof, if any were needed, that the battle is far from over for the authorities.

This significant bust symbolizes the authorities’ firm policy towards crypto, associated with a threat to the country’s financial stability and currency control. China appears ready to do everything to eradicate the underground rise of cryptocurrencies, yet their appeal remains evident to some Chinese. A situation that suggests future turmoil between Beijing and enthusiasts of virtual currencies.