Chinese crackdown on cryptos continues unabated. Proof of this is the recent dismantling of a large-scale underground banking operation, involving 2.2 billion dollars. This is based on crypto-assets, to circumvent restrictions on financial flows. A look back at this vast affair, a symbol of the regime’s hostility towards virtual currencies.
Discovery of a major money laundering mechanism in China
On December 24, information circulating on Chinese social networks revealed that the foreign exchange police had uncovered a vast parallel banking network. This made it possible, thanks to crypto exchanges abroad, to circumvent Chinese controls on international capital movements.
Authorities estimate that this large-scale money laundering scheme would have facilitated the transfer of the equivalent of $2.2 billion, relying on various stable cryptocurrencies such as Tether. In total, no less than 1000 bank accounts would have been involved in this sprawling affair.
During their investigation, Chinese authorities seized 200,000 yuan worth of cryptocurrencies, or approximately $28,000 worth of Tether and of Litecoin according to inspectors. This crypto discovery proves the use of virtual currencies by this underground network, despite the ban in force in China.
Implacable repression lasting the long term
This operation is part of the zero tolerance policy consistently applied by Beijing towards virtual currencies, perceived as a danger for the financial control of the regime. China has gradually tightened the screw: banning crypto exchanges from 2017, then total ban on crypto-assets in 2021 in the country.
Behind this repression, the fierce desire to Beijing to maintain control over financial flows and stem money laundering. In March 2022, an investigation even revealed that Binance was helping Chinese customers circumvent the crypto ban. Proof if any were needed that the fight is far from over for the authorities.
This major raid symbolizes the authorities’ firm policy towards crypto, seen as a threat to the country’s financial stability and exchange controls. China seems ready to do anything to eradicate their clandestine growth, but their attraction remains clear to some Chinese. Enough to suggest new turbulences in the future between Beijing and fans of virtual currencies.
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