About 4000 bank accounts involved in money laundry of crypto OTC traders have been frozen in China

According to Chinese publication 8btc, the Guangdong police in China froze the bank accounts of crypto traders, estimating up to 4,000 accounts suspected of being involved in illegal activities, including money laundering.


Chinese police have frozen thousands of bank accounts specializing in buying and selling cryptocurrencies

This is considered a widespread crackdown on illegal activities, such as gambling, cryptocurrency fraud, or money laundering. However, a frozen account is not necessarily related to misconduct if the authorities do not find evidence of illegal activities. Meanwhile, some accounts have been frozen without any trading activity for several months.

It is quite surprising that USDT is a cryptocurrency that is more involved in illegal activities than Bitcoin. The competent authority declares as follows:

“Tether (USDT) is frequently used in illicit activities. Because OTC trading of USDT is frequently used for money laundering.”

The police are even learning about blockchain and on-chain analysis to understand how to trace crypto assets.

Money laundering by crypto OTC trading is not new in China

However, the frozen accounts are not necessarily related to the wrongdoings and are believed to be frozen if the authorities do not find evidence of illegal activities. An investor suddenly discovered that his bank account was frozen after using the yuan to buy cryptocurrencies on a significant cryptocurrency exchange a week ago.

Chinese police busted a significant cryptocurrency scam suspected of using cryptocurrency OTC transactions for money laundering not long before. The scammers created a forged Huobi website to defraud, and then carry out OTC money laundering by a group to transfer the money obtained from the fraud to an overseas account.

The country’s central bank, the People’s Bank of China (PBOC), has stepped up efforts to crack down on money laundering. Local financial and police offices have investigated many cryptocurrency startups. Since the PBOC closed its cryptocurrency exchanges in September 2017, people in China have been using peer-to-peer OTC transactions to exchange between cryptocurrencies and yuan.

Meanwhile, cryptocurrencies are legal in China when several Chinese courts have ruled. For example, Shanghai No. 1 Intermediate People’s Court ruled that bitcoin was an asset protected by law, and Shenzhen Futian District People’s Court ruled that ethereum was an economic asset of legal value. Besides, China passed the Civil Code in May to protect the inheritance of cryptocurrencies.

The Chinese publication 8btc reported on Monday that:

“38 branches of the central banks in 18 provinces issued 94 anti-money laundering fines to 93 anti-money laundering obligors and relevant responsible persons, with a total penalty amount of 183 million Chinese yuan in Q1. The penalty amount increased nearly four times year-on-year, and the number of penalties increased by more than 50%.”

Since the first quarter of this year, China’s central bank has made unprecedented efforts in anti-money laundering, as the fines related to anti-money laundering have almost equal to last year. Many enterprises engaged in OTC, transaction, loan in the crypto space have been investigated more frequently recently by the local financial bureau and the police.

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