China Arrests 93 Members of a Criminal Group Over Alleged $5.6B Crypto Fraud

Published: 03 October 2022

Bitcoin China copy

(Photo: Phil, Pixabay, License)

By Vinicius Madureira

In the latest crackdown on cryptocurrency fraud, China said it arrested 93 suspects of a criminal group that allegedly engaged in a sophisticated nationwide conspiracy to launder up to US$5.6 billion using virtual currencies.

Police raided 10 locations, seized more than 100 smartphones and computers, and froze an equivalent of about $40 million.

According to the statement, the Chinese police accuse the group of buying cryptocurrencies with illicit funds since at least 2018. Once the dirty money obtained from telecom fraud schemes and gambling was with the cybercriminals, they converted it preferably to U.S. dollars and later sent it to other receivers via domestic and overseas accounts in countries with little government oversight. Authorities have recovered only a million dollars of the stolen money.

The alleged head of this criminal group Hong Mou is believed to be behind more than 300 cases of telecom fraud.

According to the 2022 Crypto Crime Report by Chainalysis, cybercriminals move their ill-gotten funds to a service where they can be kept safe from the authorities and eventually converted 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,” read the report.

Between 2017 and 2021, cybercriminals laundered over $33 billion worth of cryptocurrency. Last year, about $8.6 billion was laundered, which represented a 30% increase in money laundering activity over 2020.

Although China lacks a clear strategy to halt money laundering using digital currencies, in 2021 the Chinese government cracked nearly 260 cases of crypto-related money laundering and seized cryptocurrencies worth more than $1.5 billion, the Chinese Ministry of Public Security revealed.

The country’s central bank stated the share of global bitcoin trading volume in China has dropped significantly as the authorities continue to crack down on speculation in domestic virtual currency trading. The country has also cracked down on illegal fund-raising, filing 25,000 cases in the past five years.