Chinese police arrest 12 in digital currency money laundering scam

Police in China have arrested 12 individuals in connection with a money laundering scam involving digital currency OTC transactions through the Huobi platform.

Described as a “major cryptocurrency scam” in local media reports, the group used the platform to transfer the proceeds of fraud to an overseas bank account via digital currency transactions.

Victims of the scam were enticed to speculate on BTC, transferring 3.1 million Chinese yuan as directed to various different bank accounts. Ultimately, the account suffered significant losses, while also being involved in laundering money on behalf of the scammers.

After being arrested by the authorities, the group confessed to their involvement in money laundering. Funds were transferred through WeChat and Alipay, before being used to purchase digital currencies, with commissions for the group running to as much as 300,000 yuan in under six months.

The scam comes at a time of increasing emphasis on money laundering from authorities in China, part of an ongoing crackdown against illegal behaviors around digital currency.

In particular, China’s central bank has been clamping down on money laundering through digital currency assets, with fines issued so far this year almost equal to the full year total for 2019.

The enforcement drive has seen an increasing number of firms and individuals known to have engaged in various digital currency transactions subject to investigations led by the police and local financial bureaus.

China-based digital currency exchanges have also been working more closely with law enforcement agencies to uncover illegal practices, including the launch of Huobi’s own “Astrology System” early detection app designed to identify suspicious transactions.

It follows an earlier warning issued by the People’s Bank of China in March, which found that BTC was increasingly being used in money laundering schemes across the country, with the digital currency favored by scammers for its anonymity and global characteristics.

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