Chinese authorities operating in Inner Mongolia have uncovered a prolific money laundering ring using virtual currency for their illicit operations, according to a report released by a local media outlet.
The gang was said to have succeeded in moving CNY12 billion (US$1.7 billion) since the start of their operation. Investigators were tipped off by an unusual inflow of funds of over CNY10 million (US$1.44 million) in a Shimouyuan bank card.
After receiving a complaint, law enforcement set up a special monitoring task force to investigate the movement of funds. Armed with enough information, the team launched a full-scale raid spanning 17 provinces with 230 police officers to detain the individuals behind the scheme.
The raid resulted in the arrest of 63 persons for their role in the scheme, while ringleader Zhang Muo is rumored to have escaped to Thailand. Nearly CNY130 million (US$18.7 million) were confiscated by law enforcement in the gang’s bases in Beijing, Henan, Guangdong, and Heilongjiang.
The gang primarily used digital assets to launder illicit funds from gambling, Ponzi schemes, and other crimes. According to the police report, the gang recruited multiple individuals over the internet to convert funds into virtual currencies like Tether’s USDT in exchange for commissions.
Virtual currencies have been banned in China since the summer of 2021, leading to the mass exit of exchanges and groups mining Bitcoin. By using digital currency despite the prohibition, arrested individuals in the money laundering scheme currently face steep jail terms of up to 10 years.
Law enforcement agencies are flexing their muscles
Across Southeast Asia, law enforcement agents are on an impressive streak of busting criminal organizations using digital assets to aid their operations.
In the Philippines, the Criminal Investigation and Detection Group (CIDG) arrested 93 individuals after a raid in Pampanga. The CIDG disclosed that the operation was predicated on multiple reports of a digital asset scam involving impersonation and pig butchering to steal virtual currency from victims.
“The scammers then portray themselves as wealthy models and entice the unwitting victims to invest,” said CIDG director Maj. Gen. Albert Ignatius Ferro. “They then enter dating apps where they search for prospective victims. The victims are introduced to an online platform to invest in cryptocurrency and start trading.”
Similar raids have been conducted in Thailand, Japan, Vietnam, Hong Kong, and Indonesia. Across the Pacific, the United States Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) have opened multiple lawsuits against entities using digital currencies to contravene extant laws.
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