TLDR
- Chinese police detained 16 suspects in a crypto money laundering case.
- Authorities linked the network to proceeds from telephone fraud schemes.
- The suspects allegedly used bank cards and payment accounts to move funds.
- China’s 2024 judicial rules classify virtual asset transfers as money laundering tools.
- The case follows wider crypto fraud crackdowns in China, the U.S., and South Korea.
Chinese authorities detained 16 people accused of helping launder proceeds from telephone scams through bank accounts, payment channels, and crypto-linked transfers.
Police Target Crypto Laundering Network
Police said the suspects were linked to a money laundering network that processed funds from phone fraud cases. The group allegedly recruited people willing to provide bank cards and payment accounts for moving suspicious funds.
Authorities described the network as operating through close personal relationships. The structure helped members recruit account holders and manage the flow of funds between different payment channels.
Investigators have not disclosed the total amount involved in the case. They also have not confirmed specific digital assets, wallet addresses, or blockchain networks used by the suspects.
Local reports said similar laundering schemes in China often use rented bank accounts before funds move through splitting platforms. Some cases later involve conversion into USDT on networks such as TRON, although authorities have not confirmed that full path in this case.
China Strengthens Crypto AML Enforcement
China has treated crypto exchange and intermediation services as illegal financial activities since 2021. That policy did not stop criminal use of digital assets, but shifted some activity toward informal networks and offshore platforms.
China clarified its criminal framework on August 20, 2024. A joint judicial interpretation by the Supreme People’s Court and Supreme People’s Procuratorate listed virtual asset transactions among methods that can transfer or hide criminal proceeds.
The updated framework gives prosecutors a clearer basis to pursue cases where fraud proceeds are moved through digital assets. It also links crypto transfers more directly to money laundering investigations.
China’s revised anti-money laundering law took effect on January 1, 2025. The law strengthened monitoring duties and cooperation between authorities handling financial crime, online fraud, and payment abuse.
Telephone and online fraud cases often rely on recruited account holders. Police have also pursued people who sell or rent bank cards, payment accounts, and identity details for suspicious transfers.
The latest case shows how online scams can still depend on ordinary banking channels. Crypto may serve as a transfer or conversion tool after stolen money has passed through account networks.
Global Crackdown Expands Across Crypto Fraud Cases
The China detentions come as other countries also pursue crypto-linked laundering and fraud networks. In the United States, prosecutors recently charged two New York residents over an alleged investment fraud laundering scheme.
The indictment said Zhuoying Chen and Haojie Zhang managed a network that opened 140 bank accounts under about 45 shell companies. Prosecutors alleged the network laundered at least $43 million from cyber investment fraud scams.
Assistant Attorney General A. Tysen Duva said, “Dismantling Chinese money laundering networks that support investment fraud schemes is critical to protecting Americans.” U.S. Attorney Joseph Nocella Jr. said the defendants allegedly moved more than $40 million in victim funds to bank accounts in China.
South Korean police also recently arrested three suspects in an XRP staking fraud case. Authorities said 71 victims sent 3.4 million XRP to a fake FXRP platform that promised high fixed returns.
