A Beijing court has sentenced seven people over a crypto laundering case involving $20 million in stolen funds, raising fresh questions about how China might tighten its stance on digital assets.
Summary
- Beijing court jails seven over crypto laundering case linked to rigged bonus payouts.
- Funds were laundered through offshore crypto exchanges and coin mixers.
- Chinese authorities recently warned of rising crypto fraud.
According to local reports, at the center of the case is a former employee of a video platform based in the Haidian District. Prosecutors allege that the individual abused his control over internal reward programs, leaking company data and rigging application processes to funnel 140 million yuan, roughly $19.3 million, in fake bonuses to a network of fake vendors run by his co-conspirators.
Ghost companies were set up to receive the funds, internal controls were bypassed, and paperwork was forged to cover the tracks. The stolen funds were then moved through eight offshore crypto exchanges, converted into Bitcoin (BTC) and other digital assets.
To conceal the trail, the perpetrators used coin-mixing services, a common tactic in crypto laundering, before cashing out some of the assets back into yuan and hiding them in private accounts.
Investigators managed to crack the flow using digital forensics and recovered over 90 BTC, worth around $11 million at current prices. The perpetrators were also convicted of embezzlement, sentenced to prison terms ranging from three to fourteen and a half years.
While this incident was a corruption case at its core, the use of crypto for laundering now raises broader questions of potential implications for the local industry.
China’s lukewarm stance on crypto
China has long maintained a cautious, often restrictive posture toward digital assets. Trading, mining, and related activities are restricted, following the implementation of a blanket ban in 2021.
Just weeks ago, the Shenzhen Municipal Task Force for Preventing and Combating Illegal Financial Activities issued a public warning about rising fraud tied to digital assets. Officials highlighted a surge in scams involving yuan-tied tokens, with unlicensed operators using crypto buzzwords to attract investors, launder money, and run illegal fundraising schemes.
Despite recent whispers that regulators are reconsidering parts of their hardline stance in response to the growing interest in stablecoins in the region, cases like the $20 million scheme risk setting that progress back, potentially prompting stricter rules that turn up pressure on the local industry.
Regulators have yet to comment on the crackdown, and it remains to be seen if or how the case will trigger any policy shifts.
