In a significant blow against illegal cryptocurrency operations, Chinese authorities have sentenced Zhao Dong, the founder of RenrenBit and a minor shareholder of Bitfinex, to a seven-year prison term. Zhao Dong, a prominent figure in the crypto industry known for his influence in the over-the-counter digital asset market, faced charges for running illegal business operations and engaging in unauthorized foreign exchange trading. This move underscores China’s continued crackdown on illicit activities within the industry.
The sentencing of Zhao Dong is part of a broader campaign by Chinese authorities that highlights a series of eight cases related to financial crimes. These cases range from fraudulent foreign exchange transactions to complex financial scams, demonstrating the government’s firm stance against financial impropriety.
Chinese authorities have taken a meticulous approach to investigate and unravel complex financial transactions associated with illegal activities. They have focused on accounts connected to these crimes and gathered objective evidence such as bank statements, communication records, confessions, and witness testimonies. This demonstrates their commitment to combating illegal financial activities and their determination to create a high-pressure environment against such cross-border activities.
China’s crackdown on illegal activities in the cryptocurrency domain sheds light on emerging trends in foreign exchange crimes. Criminals are adopting more sophisticated methods, such as “counter-attacking” models, to evade regulatory scrutiny. These models involve moving domestic and foreign funds independently to avoid detection. The use of virtual currencies and social media for illegal financial activities presents new challenges for law enforcement agencies.
The Supreme People’s Procuratorate and the State Administration of Foreign Exchange emphasize their unwavering commitment to ensuring the integrity and robustness of China’s financial system. This collaborative effort aims to create a high-pressure environment against illegal cross-border financial activities. By targeting foreign exchange-related crimes and illicit cross-border transactions, the authorities aim to protect the financial security of the country.
In December, reports surfaced on Chinese social platforms regarding the discovery of an illicit bank using cryptocurrency to bypass foreign exchange regulations. The Qingdao branch of the State Administration of Foreign Exchange revealed that underground banks were purchasing virtual currencies and then selling them through overseas trading platforms to obtain the required foreign currency. This activity constitutes an unlawful exchange of yuan and other foreign currencies.
During the investigation, officials seized digital currencies valued at $28,000, equivalent to 200,000 Chinese yuan. The assets confiscated included Tether, Litecoin (LTC), and others. The illicit scheme involved the movement of funds exceeding $2.2 billion (or 15.8 billion Chinese yuan) through over a thousand bank accounts spread across 17 different regions.
China’s latest crackdown on illegal crypto activities, as demonstrated by the sentencing of Zhao Dong, signifies the government’s determination to combat financial impropriety within the industry. By targeting foreign exchange-related crimes and illicit cross-border transactions, the authorities aim to create a high-pressure environment against illegal activities that could compromise the financial security of the country. The emerging trends in sophisticated financial crimes, involving virtual currencies and social media, pose new challenges for law enforcement agencies. The collaborative efforts between the Supreme People’s Procuratorate and the State Administration of Foreign Exchange highlight their unwavering commitment to ensuring the robustness and integrity of China’s financial system.