Title: Virtual Currency Money Laundering Case Involving 400 Billion Yuan Uncovered, Becoming the Most Common Virtual Currency Crime
Publication Date: July 20, 2023
In a major breakthrough, law enforcement agencies successfully solved a virtual currency money laundering case involving a staggering amount of 400 billion yuan. The Public Security Bureau of Shayang County, Hubei Province, reported the detection of a cross-border online gambling case with over 50,000 individuals involved.
According to Ping An Hubei, the server for this illegal operation was set up outside of the country, and all transactions were settled using virtual currency. This case marks the first instance in the country where a court has confiscated frozen virtual currency under the category of a “virtual currency case.”
The Okey Cloud Chain Research Institute’s statistical data reveals that out of various virtual currency crimes in 2022, money laundering accounted for 54.72%, followed by fraud at 21.13%. This highlights the prevalence and seriousness of virtual currency crimes.
The investigation revealed that the gambling case involved an enormous sum of 400 billion yuan, implicating more than 50,000 individuals. The server’s location overseas and the utilization of virtual currency as a medium for money laundering made the case significantly challenging to crack. However, the dedicated special case team managed to track and freeze multiple virtual currency accounts related to the operation, preventing approximately 160 million US dollars (around 1 billion yuan) from falling into the hands of the criminal gang.
No official statement has been released by the Shayang County Public Security Bureau at the time of publication. However, available information from the China Judgment Documents Network indicates that there have been a total of 7,948 documents related to virtual currency, with 183 reported this year. The peak years were from 2019 to 2021, with 1,301, 1,680, and 1,830 documents respectively.
Furthermore, statistics from the Chengdu Lianan Blockchain Security Situational Awareness Platform demonstrate that crimes in the blockchain field in 2022 reached a total of 13.7 billion US dollars, with money laundering accounting for 7.33 billion US dollars.
Experts have shed light on why virtual currency has increasingly become a favored channel for money laundering. Jiang Zhaosheng, a senior researcher at the Okey Cloud Chain Research Institute, identified the difficulties faced by law enforcement agencies in investigating virtual currency-related cases. These challenges include finding related clues, associating on-chain and off-chain identity information, gathering and preserving evidence, and recovering and disposing of stolen funds involved in the case.
Yang Xia, the founder and CEO of Chengdu Lianan, pointed out that virtual currency has emerged as an alternative money laundering channel due to the crackdown on traditional money laundering methods by relevant state departments. In contrast to previous years, where virtual currency was commonly used as a deceptive tool, 2022 witnessed its increased utilization as an intermediary and tool for criminal activities such as money laundering and online gambling.
Speaking to Yuanverse News reporter, Yang Xia further highlighted the characteristics of virtual currency, including its decentralization, anonymity, global convertibility, and transaction convenience, making it prone to be exploited for various criminal activities in the future.
According to Zhou Di, a national science and technology expert at the Ministry of Science and Technology, virtual currency’s susceptibility to money laundering stems from its decentralization, which allows it to evade financial supervision and foreign exchange controls. Additionally, the complexity of transaction models, irrevocability after transactions, and controversial value identification standards pose significant challenges to the control and retrieval of virtual currency funds.
The exposure of this massive virtual currency money laundering case serves as a reminder of the urgent need for regulatory efforts and international cooperation to combat virtual currency-related crimes effectively. Authorities continue to grapple with the ever-evolving landscape of financial crimes in the digital age, emphasizing the necessity for adaptive strategies and enhanced technological capabilities.