Six arrested in cryptocurrency money-laundering scheme in northeast China

Police in China’s northeastern Jilin province have arrested six people in connection with a money-laundering case involving the movement of 2.14 billion yuan (US$296 million) in cryptocurrency to South Korea.

Jin and Shen, the surnames of two suspects, allegedly carried out an illegal currency exchange business, according to a statement issued by police in the city of Panshi, the state-run China News Service reported on Friday.

Some people were defrauded out of their money, according to police, who did not identify which cryptocurrencies were used in the scheme.

Law enforcement became aware of the scheme when bank accounts under the suspects’ names showed “large [daily] transactions” involving a “large number of customers”. The activity had the characteristics of an illegal underground bank, according to police.

Mainland China maintains a strict ban on commercial cryptocurrency activity, as Beijing has long regarded it as a threat to financial stability. The central government also has strict foreign exchange controls over capital flight concerns.

However, the overall volume of money in crypto-related money laundering cases has recently decreased. Illicit addresses sent US$22.2 billion worth of cryptocurrency in 2023, a 29 per cent decline from the US$31.5 billion sent in 2022, according to Chainalysis. “Both legitimate and illicit” trading activity saw an “overall decrease” in that period, the firm said.