Chinese Police Bust $296M Illegal Crypto-Based Currency Operation: Report

As an analyst with a background in finance and experience following the Chinese regulatory landscape for cryptocurrencies, I find this development troubling but not entirely surprising. The ease of cross-border transactions and anonymity that cryptocurrencies provide make them an attractive tool for illegal activities, including currency conversion services like the one described in this report.

Six individuals were apprehended by the Chinese authorities for operating an unlawful cryptocurrency exchange handling approximately 2.14 billion yuan (equivalent to $296 million) in transactions, as detailed in a report from China News Service that circulated on Weixin.

As a researcher, I came across an intriguing piece of information: the Public Security Bureau of Panshi City, Jilin, reportedly discovered what they’re calling an “underground bank.” According to the state-owned news service, this discovery was made public.

The report reveals that the operation employed domestic accounts for processing transactions while taking advantage of the anonymity and borderless nature of over-the-counter virtual currency trading to convert between the yuan and South Korean won. Users encompassed various entities such as Korean purchasing agents, e-commerce businesses, and import/export companies.