Billions in Crypto Used In Crime Has Flowed In & Out Of China Since 2019
According to a new report from Chainanalysis, since 2019 Chinese crypto addresses have sent and received billions of dollars worth in cryptocurrencies used in criminal activies, in and out of China.
Between April 2019 and June 2021, Chinese addresses sent over $2.2 billion-worth of crypto to addresses associated with illicit activity, according to blockchain data company Chainalysis’ report: “Cryptocurrency and China.”
In that time frame Chinese crypto addresses have also received over $2 billion in dirty digital money, according to Chainalysis. The illicit activity includes scams and “darknet market operations”—such as the trafficking of the opioid drug, fentanyl, the report said.
Chainalysis noted:
“Just as it’s been a crucial part of the overall cryptocurrency ecosystem, China has also historically played a large role in cryptocurrency-related crime.”
Regardless of these huge sums, China’s transaction volume with illicit addresses has actually declined over the two-year period in terms of absolute value and compared to other countries, like the U.S. and Russia, which have both experienced surges in crypto-related crime.
The reason is the collapse of big Ponzi schemes, such as the 2019 PlusToken scam, according to the findings. China-based PlusToken was one of the biggest alleged Ponzi schemes in the history of cryptocurrency scams, allegedly conning investors out of over $3 billion in crypto.
According to Chainalysis, money laundering via crypto is “disproportionately carried out in China”, especially with over-the-counter (OTC) trades.
Chinese authorities’ crypto crackdown is reportedly focusing on addressing the illegal use of Crypto and in June 1,100 individuals were involved in cleaning dirty cash via crypto, said Chainalysis.
According to the report:
“The timing of these arrests suggests they may be related to the CCP’s [Chinese Communist Party’s] broader cryptocurrency crackdown, but it will be interesting to see whether the arrests lead to a drop in flows of illicit funds to China-based cryptocurrency businesses and OTC traders.”
Between the Chinese government’s crackdown on illicit crypto transactions and its ban on Bitcoin mining, China’s dominance over the cryptocurrency market may continue to fade, which might be exactly what they want to make way for governments CBDC, called Digital Yuan, or e-CNY.
