Police from Guangdong province freeze bank accounts on suspicion of involvement in money laundering
Thousands of bank accounts of OTC crypto traders who hold cryptocurrencies, cash, and Tether (USDT) have been frozen by the police in China’s Guangdong province in a major crackdown against illicit activities including money laundering. Chinese publication 8btc reported that at least 4,000 of such bank accounts have been frozen with the operation starting from June 4. The accounts have been frozen by the Chinese authorities on the suspicion of converting ‘grey earnings’ using open markets.
Chinese police have ramped up efforts to crack down on scams related to cryptocurrency and gambling in the past few months. Police have also been receiving training regarding blockchain and on-chain analysis to be able to trace crypto assets effectively. According to 8btc, Tether is frequently used in illicit activities. Cryptocurrency over-the-counter (OTC) traders have been accused of accepting cash from telecom fraudsters, crypto scammers and other illegal sources.
According to the Guangzhou city police, the province’s USDT market gets its money from sources other than just institutional investors. For instance, Crypto scammers created a fake Huobi exchange to defraud traders and steal their money through OTC exchangers. The scam cost investors more than 3.5 million yuan ($494,944).
Thus, money flow to the OTC market remained under the purview of the authorities. The police used bank details, blockchain data and crypto addresses, along with other records to identify large chunks of transactions through the OTC market to trace the accounts involved. Accounts of traders who quit trading months ago have also been frozen, reports suggest.
Sun Xiaoxiao, a former staffer at Chinese crypto wallet start-up Bixin, raised the alarm about his account being frozen through a Weibo post last week. He stated that it was not an individual case and there had been mass freezing of crypto traders’ accounts by the Chinese authorities. In a follow-up post, Sun stated that he believes that the police are investigating ponzi scams, telecommunication frauds and casino businesses.
“Now there are also OTC merchants who had their bank accounts frozen because of questions over the source of the coins they bought. That means, besides ‘dirty money,’ there are also ‘dirty coins circulating,” Sun wrote. He added that although Bitcoin was previously the most popular choice for high-risk capital transfers in China, USDT is the current favourite.
Frozen accounts are not necessarily involved in wrongdoings and can be unfrozen if innocence is proved and authorities find no evidence of illicit trading. However, the time taken to unfreeze the accounts will also depend on the severity of the cases, Sun wrote.
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