Police in China’s Guangdong province have frozen four thousand bank accounts thought to be connected to money laundering via digital currency.
Local media reported that the authorities identified bank accounts belonging to digital currency over-the-counter (OTC) traders suspected of involvement in illegal money laundering activity, with OTC trading of USDT often used for money laundering purposes.
Further action is expected in future, with law enforcement intensely investigating suspect accounts for involvement in illegitimate transactions following a spate of money laundering scams and frauds involving digital currency transactions in the country.
There have been multiple reports from digital currency investors of “reverse freezing,” after purchasing crypto from OTC sellers. It is thought would-be investors are being duped into participating in the money laundering scam by buying “black money” digital currency from those laundering funds through Tether and other digital currencies.
Police are currently analyzing blockchain data to identify more suspicious transactions, as part of ongoing investigations into digital currency accounts and OTC traders in the country.
The enforcement action comes as the latest in a series of steps from authorities across China to clamp down on illegal activity in the digital currency space, following a rise in fraud in recent months. By the first quarter of 2020, fines for anti-money laundering breaches had already totaled as much as the entirety of fines issued in the previous year.
China is notably restrictive on digital currency trading activity, outlawing private citizens and businesses from engaging in digital currency trading and associated activities.
However, the government is committed to blockchain technology, with multiple different projects in development across the public sphere.
The People’s Bank of China is also working on a central bank digital currency—the digital yuan—currently being trialed in a number of locations across the country ahead of a formal wider rollout expected over the coming months.
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