China’s Supreme Procuratorate has dealt a significant blow against illegal cryptocurrency operations by sentencing Zhao Dong, the founder of RenrenBit and a minor shareholder of Bitfinex, to a seven-year prison term.
The prominent crypto figure 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.
Crypto OTC Illegal Ventures
Dong, known for his significant influence in the over-the-counter (OTC) digital asset market and as a minor shareholder in Bitfinex, has faced legal consequences as authorities intensify their crackdown on illegal crypto activities.
His entrepreneurial ventures, particularly in the crypto domain, have suffered a setback as the Supreme People’s Procuratorate, in collaboration with the State Administration of Foreign Exchange, targeted foreign exchange-related crimes.
The sentencing of Zhao Dong is part of a broader campaign by Chinese authorities, highlighting a series of eight cases. They exemplify the government’s commitment to combating illegal financial activities, particularly those with international dimensions.
The offenses in these cases range from fraudulent foreign exchange transactions to complex financial scams, underscoring the government’s firm stance against financial impropriety.
Chinese authorities have meticulously investigated, traced, and unraveled complex financial transactions, mainly focusing on accounts associated with these crimes. The case against Zhao Dong and his associates was built on objective evidence such as bank statements, communication records, confessions, and witness testimonies.
China Initiates Crackdown
China’s crackdown on such activities sheds light on emerging trends in foreign exchange crimes. Criminals are adopting more sophisticated methods, including “counter-attacking” models, where domestic and foreign funds are moved independently to evade regulatory scrutiny.
Using 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 financial security. This collaborative effort aims to create a high-pressure environment against illegal cross-border financial activities, ensuring the robustness and integrity of China’s financial system.
On December 24, reports were circulating on Chinese social platforms, indicating the discovery of an illicit bank using cryptocurrency to bypass foreign exchange regulations.
Xu Xiao, an official from the Qingdao branch of the State Administration of Foreign Exchange, clarified that underground banks were purchasing virtual currencies, which were then sold 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 reportedly 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 across 17 different regions.
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