Police in the north Chinese region of Inner Mongolia have cracked a large criminal syndicate suspected of laundering 12 billion yuan ($1.7 billion) through cryptocurrencies, even though transactions of digital assets are banned in the country.
They have arrested 63 suspects and seized 130 million yuan in illegally-acquired assets, including 32 million yuan in cash, according to a statement by the public security bureau of Tongliao city on Saturday. Photos from the raid posted by the bureau showed a mountain of cash, as well as several suitcases packed with Chinese yuan.
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Authorities were alerted to the syndicate’s activities in July, when they noticed one of the suspects had an unusually high monthly transaction volume of 10 million yuan passing through his bank account.
Working with foreign syndicates since last May, the gang allegedly converted illicit funds obtained through pyramid schemes, scams and gambling into the cryptocurrency Tether, a stablecoin pegged to the U.S. dollar. They recruited workers through Telegram—an encrypted messaging platform blocked in China—to open anonymous crypto accounts, which were then used to convert the funds back into Chinese yuan.
The gang operated multiple laundering dens across the country, while workers earned different commissions based on their ranks after each transaction. After three months of investigation, authorities deployed 230 officers to 17 provinces across the country in September to conduct raids, though it’s unclear when they took place.
China intensified its crackdown on cryptocurrencies last year, issuing a blanket ban on trading and mining of digital assets to guard against financial risk and rising criminality associated with their use. Despite that, China remains the largest crypto market in East Asia, recording more than $220 billion in total transactions between June 2021 and July 2022, as traders use VPNs to circumvent the Great Firewall.
In a statement, an officer investigating this latest case said tracing exchanges in cryptocurrency is complicated and makes investigating challenging.
Besides raids within the country, two main suspects, who had successfully fled to the Thai capital Bangkok, were also “persuaded to return” to the country in October. The statement did not elaborate on what that entailed, though Chinese authorities are known to use coercive methods to pressure suspects into returning home to face justice.
The two main suspects were handed over to police from Inner Mongolia after spending ten days in quarantine in Yunnan province in southern China.
