Chinese Court Sentences Group for Money Laundering via Digital Yuan
Summary:
A Chinese court has convicted and sentenced members of a group involved in a money laundering scheme using digital yuan. The three individuals received prison terms of seven to sixteen months and were fined for laundering 200,000 yuan over four days. They exploited the digital yuan's 'controllable anonymity'—a feature cited as crucial for crime prevention—and used it to their advantage in their illicit operations. The case is part of a rare but emerging trend of crimes associated with the digital yuan.
A Chinese court has imposed prison sentences and monetary penalties on a group found guilty of money laundering via digital yuan, as per regional media reports. The People's Procuratorate of Yuecheng District, in Shaoxing City, Zhejiang Province, sent three individuals to jail for periods between seven and 16 months for performing money laundering operations. The exact trail date, however, was not disclosed.
The group under investigation, identified solely by surnames, tactically washed a total of 200,000 yuan ($27,580) in a digital form over a span of four days in mid-September in Shaoxing, as reported by the Mpaypas, a Chinese commerce site. Another accused individual was reported to have been taken into custody, however, their circumstances remain unknown.
In an unexpected turn of events, Yuan, who relocated to Shaoxing on a failed job hunt, saw a hotel advertisement offering 0.8% commission for those capable of cashing out digital yuan with local businesses. After a few independent transactions, Yuan enlisted the help of his girlfriend, Zhang, and friend, Kuo.
Taking advantage of the strong privacy provided by digital yuan, the team approached businesses in Shaoxing, Jinhua, Hangzhou, Jiaxing, amongst other locations, proposing a 1% to 1.5% commission to convert digital yuan received from their 'senior' into cash. Communication with their senior took place via "overseas niche chat tools.”
Unfortunately, few stores accept the digital yuan, noted Mpaypas. Authorities intervened when they noticed unusual digital yuan activity among merchants, leading to the swift capture of the group.
The digital yuan's controllable anonymity has been referred to by both present and preceding People’s Bank of China officials as a necessity for crime prevention, a term utilized in the press report also.
Fraudulent use of the digital yuan isn't common. Earlier this year, a similar case from May 2023 in Shanghai was reported by Cnstock, a site that serves as a "Chinese capital market legal information disclosure platform." This was reportedly the first crime of its kind in that city.
Eight people, including merchants, were found guilty in Shanghai, with prison sentences ranging from four to 54 months, and fines were also issued. The accumulated laundered amount totaled $1,379,000, some of which was tied to "telecommunications network fraud". The ability to open digital yuan accounts with merely phone numbers played a pivotal role in the scheme. Bank employees reported the suspicious transactions, leading to the discovery of the unlawful activities.
Published At
6/13/2024 8:17:58 PM
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