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China Arrests 1,100 People Allegedly Using Cryptocurrency to Launder Criminal Proceeds

china arrests people cor laundering criminal proceeds with bitcoin - bitcoin official - cryptocurrency

China’s “Broken Card” Operation Cracks Down on Crypto Criminals

Arrests have been ratcheting up across China and beyond its borders as the People’s Republic of China’s Ministry of Public Security has announced its latest successes in cracking down on criminal gangs who have been using cryptocurrency to money launder illegal activities.

Launched last October, the operation dubbed “Broken Card” has resulted in the arrests of 1,100 individuals and the elimination of 170 criminal gangs in its latest leg.

According to the announcement, the operation has in total busted 15,000 gangs and 311,000 individual suspects, and it has “controlled 18,000 illegal industry outlets and institutions.”

“Coin Farmer” Accomplices

The Broken Card operation has focused on telecommunications network fraud, specifically the sales of phone and payment cards and money laundering services.

Police efforts have uncovered how crypto criminals have laundered the criminal proceeds from their illegal activities.

Often they employ the use of “coin farmers” who sign up and set up personal accounts with various cryptocurrency exchanges. The farmers are then issued funds by their handlers which they use to buy and sell virtual currencies as they have been instructed. Those currencies are then sent to the wallets of gang members.

As a reward for their efforts in hiding the criminal proceeds, the coin farmers can obtain 1.5 to 5 percent commissions. This type of illegal payout is lucrative enough to attract a great many participants causing significant social harm.

China’s Strict Limitations on Cryptocurrency Services

China has long expressed concerns about the volatility of cryptocurrencies and the fact that they are unsupported by real value. Prices are too easy to manipulate causing them to skyrocket one day and plummet the next.

As a result of those long-standing concerns, the country shut down its local exchanges and initial coin offerings. In addition, the National Internet Finance Association of China, the China Banking Association, and the Payment and Clearing Association of China have prohibited providing crypto-related services. However, individuals are still allowed to hold cryptocurrencies.

Stepping Up Efforts

According to China’s Payment and Clearing Association, crypto-related crimes are increasing and have been found to be a popular choice of payment for illegal gambling activities. At this point, 13 percent of gambling sites accept cryptocurrency which makes tracking illegal activities all the harder.

Of late, Bitcoin mining has gotten into China’s cross hairs. Bitcoin mining operations in China’s Qinghai province have recently been shut down.

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