Those who doubted China’s commitment to their recent ban on crypto-related services and the mining of said currencies were clearly very mistaken. Chinese authorities have arrested over 1,000 people suspected of using the proceeds from criminal activities to buy cryptocurrency and crypto mining farms.
It seems that officials have turned a sharp eye towards the mining of cryptocurrencies in an attempt to crack down on the crypto mining industry in China, as their concerns of illegal activities related to said currencies are proving to be accurate.
The country’s bitcoin mines are responsible for powering between 75% and 80% of the global cryptocurrency trade, even though the trading of cryptocurrency has been banned since 2019.
A network of 1,100 people accused of laundering money by purchasing cryptocurrencies have been arrested in China. According to the Chinese Ministry of Public Security, the launderers were charging their clients a commission rate to convert proceeds obtained through illegal activities to cryptocurrency via crypto exchanges without disclosing the amount of money involved.
The public security ministry said that police had busted over 170 criminal syndicates who were all involved in money laundering using cryptocurrencies by Wednesday afternoon. They also said that the launderers were charging their criminal clients a fee of between 1.5% and 5% to convert the illegal proceeds to cryptocurrency using exchanges.
Many of these syndicates were involved with online and telephonic scams where they use illegal funds to purchase phone cards that are shipped outside of China. These cards are then used to make scam phone calls back into the country. They had then purchased cryptocurrency to hide the proceeds of these scams.
Other syndicates were using ill-gotten funds from illegal activities to build cryptocurrency mining operations in the country, which were descended upon by the Chinese police last Wednesday.
The Chinese Payment and Clearing Association believes that the number of criminal activities related to the use of cryptocurrency is on the rise. They have stated that because cryptos are anonymous and convenient, “they have increasingly become an important channel for cross-border money laundering,”.
China’s battle against cryptocurrency has been making headlines in the crypto world since the first crackdown in 2013 when China banned financial institutions from providing services related to bitcoin. This ban was reimplemented in 2017 to include all cryptocurrencies and initial coin offerings (ICOs).
Regardless of their efforts to clamp down on digital currencies, China has still become the global cryptocurrency mecca over the years and accounts for around 65% of global cryptocurrency mining, with Inner Mongolia accounting for 8% of the computing power needed to run the global blockchain – which is more than what is dedicated to blockchain in the entire United States.
However, the northern region of Inner Mongolia had closed down all its crypto mines in April this year as the operations failed to meet the annual energy consumption targets, and the province of Qinghai has recently announced a similar ban.
It’s easy to see why countries would prefer to impose rules and regulations on digital currencies when hearing about these illegal operations. These issues need to be ironed out if the world is going to move toward global adoption.
But on the other hand, money laundering takes place regardless of cryptocurrency, and although these digital assets may provide an easy alternative, it’s the criminals that need to be eradicated, not the currencies.