Police in China detaining digital currency OTC traders: report

China’s fight against digital currency trading has now turned to the over-the-counter trading sector. Police in the country have been detaining OTC traders and platform operators to assist them with investigations. The most renowned is Zhao Dong, one of China’s most prolific traders and a prominent investor in Bitfinex.

Dong was detained this week, with reports about his detention first emerging on local social media channels on Thursday. Local blockchain news outlets picked up on the reports, with some claiming that he was detained in Hangzhou while others claimed he was in Yancheng.

Following the widespread rumors, Dong’s OTC digital currency OTC lending company RenrenBit took to social media to shed more light. In a statement on Weibo, RenrenBit revealed that the police had detained Dong upon arrival in China from Japan in late June. He was actively assisting the police in digital currency anti-money laundering investigations, the company claimed.

RenrenBit also revealed that Dong wasn’t the only digital currency trader the police had detained. It claimed that in June, police had detained an entire OTC team working in Beijing. However, it clarified that it was just detention and that none of the traders were under arrest.

Matthew Graham, the CEO of Beijing-based blockchain investor Sino Global Capital confirmed the detention on Twitter.


A source with knowledge on the matter however revealed that Dong’s detention isn’t a targeted attack at him. It’s part of a bigger effort by the government to stamp out OTC trading in China, claiming that it’s being used to launder money.

The source, who spoke to CoinDesk, claimed that police in China have increased their scrutiny over OTC platforms since last month. This scrutiny has led to the detention of an unnamed number of OTC trading desks to assist in money laundering investigations.

The detention of Zhao Dong is however the most high-profile one yet. Dong is one of China’s most renowned traders.  He is also reportedly an investor in Bitfinex, playing a big role in its $1 billion UNUS SED LEO token initial exchange offering. As Sino Global’s Graham explained, in the Western world, it’s the equivalent of detaining one of the Winklevoss twins.

The detentions follow the freezing of over 4,000 bank accounts belonging to digital currency OTC traders. As CoinGeek reported, authorities in Guangdong province froze the accounts claiming they were connected to digital currency money laundering.

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