Law Enforcement Sting Unearths Chinese Gambling Ring That Laundered $5.6bn Through Crypto

A lengthy investigation

Chinese authorities have taken down an enormous, high-profile criminal syndicate in the Hunan province, according to reports. 

$5.6bn in proceeds were laundered through cryptocurrency

The group managed an illegal gambling network and numerous telecommunication scams, from which $5.6bn in proceeds were laundered through cryptocurrency. According to Chinese media source Weixin, 93 individuals were arrested as part of a 100-day push to crack down on crime on the mainland. Police also froze different accounts holding a total of ¥300m ($41.4m).

In addition, the authorities recovered ¥7.8m ($1.1m) that they traced back to victims of the scams. Those victims will receive their money back, even if they lost it through gambling, which is a crime everywhere in mainland China.

More Chinese gambling arrests to come?

Both the number of arrests and jaw-dropping figures at hand have created suspicion that even more criminals will be apprehended. Even law enforcement is still unsure how far the illegal network expands.

An investigation into the criminal conglomerate began in 2018. Police determined that the group used collection and payment points in China to transfer illegally-obtained funds into cryptocurrency. From there, they cashed out with US dollars, and then put that money into financial companies. 

One possible explanation for the rise in illegal gambling is China’s travel restrictions, which have delayed recovery in the Southeast Asian market. Macau, a south-China entertainment destination, has faced the brunt of the effects.

in Shanghai, over 800 people have been arrested for illegal online gambling

Because would-be gamblers are not being allowed to visit China’s prominent destination, they are resorting to illegally accessing online operators. In Shanghai, over 800 people have been arrested for illegal online gambling since the start of the year.

More than 150 entities offering gambling services or money laundering services have also been shut down during the same period. A total of ¥170m ($23.53m) has been recovered as a result.

Chinese aversion to crypto

Blue Whale Finance, another Chinese outlet, reported that popular crypto hub Binance is supporting an investigation. Tracking wallets to users is difficult because of the anonymity, but forensic investigators do have the ability to reveal users’ locations.

Binance also sent notices to several account holders that their wallets had been frozen and that they would need to contact Chinese authorities for more details. 

it sees currencies like Bitcoin and Ethereum as a scam, leading to a ban last September

China is extremely opposed to crypto providers like Binance and only recognizes digital currency from its central bank. It sees currencies like Bitcoin and Ethereum as a scam, leading to a ban last September on both crypto trading and mining. 

The main reason the Chinese government opposes crypto is the recent introduction of its online Yuan, which it can fully regulate, unlike regular decentralized crypto coins. China has mulled the idea of extending the practice to Macau, but there are concerns that illegal Chinese gambling would spike even further.

As proof, a famous Macau gambling head was arrested in 2021 for illegal gambling and money laundering, leading to an appearance in court less than two weeks ago. The man in question, Alvin Chau, denied the charges.