The Ministry of Public Security in China has detained around 1,100 people on charges of using cryptocurrency to launder money.
They are believed to have done so through fraudulent SIM cards and illicit bank accounts.
Chinese authorities say they have also eliminated more than 170 financial crime gangs while making the arrests.
In recent weeks the government has taken measures to curb the use of cryptocurrencies. In May, regulatory authorities banned financial and payment institutions from providing services related to transactions in the cyber money.
“In order to avoid the investigation and crackdown, fraudsters turned to use virtual currency to transfer the funds involved,” online news service Live Bitcoin News quoted the public security ministry as saying.
“Driven by illegal interests, some criminals actively provide services to fraud gangs, helping scam gangs transfer and launder money by purchasing and exchanging virtual currencies and become criminal accomplices.”
The criminal gangs usually enlist ‘coin farmers’, people who trade in virtual currencies through their own personal bank cards and information and so help the gangs launder money. The coin farmers’ commission ranges from 1.5% to about 5%, the ministry said.
“The high, illegal income attracts many people to participate, causing serious social harm,” it added.
In light of volatility in the cyber currency market, regulators working with the People’s Bank of China said: “Prices of cryptocurrency have skyrocketed and plummeted recently, and speculative trading has bounced back. This seriously harms the safety of people’s property and disturbs normal economic and financial orders.”
FinCrime World Forum
Register to FinCrime World Forum to listen to the ”Scanning the Virtual Horizon The next steps for global Virtual Asset regulation” talk on June 23 at 4:40pm BST | 5:40pm CEST | 11:40am ET.
- Kayla Izenman, Research Fellow, Centre for Financial Crime and Security Studies, Royal United Services Institute (RUSI)
- David Carlisle, Director of Policy and Regulatory Affairs, Elliptic
- Siân Jones, Senior Partner, XReg.Consulting