Chinese Authorities Uncover $2.2 Billion Crypto-Based Underground Banking Operation
Summary:
Chinese authorities have uncovered a $2.2 billion underground banking operation that allegedly used foreign crypto trading platforms to bypass the country's capital controls. The operation reportedly involved buying digital currencies to be sold on overseas platforms, thereby converting yuan to foreign currencies illegally. Authorities seized $28,000 worth of various cryptocurrencies, despite the operation having moved an estimated $2.2 billion. The bust underscores China's firm stance against the misuse of digital currencies, with an extensive ban still in effect.
A mega underground banking operation, reportedly valued at $2.2 billion, was recently dismantled by Chinese officials. This lavish operation allegedly utilized international 'crypto trading platforms' to enable its users to evade China's capital restrictions. On December 24th, reports surfaced on Chinese social media that an undercover bank utilizing cryptocurrency to circumvent forex limitations had been busted by foreign exchange enforcement officials. Xu Xiao, an Inspector for the Qingdao Division of the State Administration of Foreign Exchange, remarked that these underground banks would procure digital currencies, which they would then offload on overseas trading platforms to attain desired foreign currency. Xu added that this intricate process facilitated illegal foreign exchange trading by converting yuan to other currencies. Reportedly, investigators on the scene confiscated $28,000 worth of various cryptocurrencies, including Litecoin (LTC) and Tether, despite the operation successfully moving approximately $2.2 billion (15.8 billion Chinese yuan) across a network of over a thousand bank accounts distributed amongst 17 provinces and cities. According to Chinese legislation, the annual limit for Chinese citizens fluctuating foreign currencies is capped at $50,000 unless they possess a special permit. Any attempts to dodge these constraints is viewed as money laundering. Some suggest that these policies help explain China's stern stance on digital currencies. However, Chinese officials maintain that the outlawing of cryptocurrency was largely driven by its misuse for laundering criminal proceeds. Notably, in 2016, China enforced rigid foreign exchange regulations, mandating banks, companies, and individuals to adhere to a restricted capital account policy. The policy demands that capital cannot freely move in or out of China, unless compliant with these strict state-imposed rules, implemented to thwart capital flight. A year following the enforcement, Chinese authorities banned cryptocurrency exchanges. This hard-lined stance on digital currencies was fortified in 2021 with the implementation of an extensive ban. There have been claims that Binance personnel and volunteers were purportedly aiding customers to sidestep Know Your Customer (KYC) protocols. Most recently, on December 23rd, the SCMP reported that Chinese users were accessing Binance by falsely stating their location as Taiwan.
Published At
12/27/2023 8:41:32 AM
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