China Cracks Down on Criminals Laundering Money Through Bitcoin

Security officials in China have arrested over a thousand people for using the profits from crime to buy Bitcoin and other cryptocurrencies. The arrests were part of a growing crackdown on the cryptocurrency market.

The country’s bitcoin mines power nearly 80% of the global trade in cryptocurrencies, despite cryptocurrency trading in China being banned. Chinese officials have started to focus on cryptocurrency miners to prevent speculation and stamp out money laundering.

Police in China busted a network of 1,100 people involved in laundering money by buying Bitcoin and other cryptocurrencies, the ministry of public security said in a statement dated Wednesday.

The launderers charged clients commission to convert illegal proceeds into virtual currencies via crypto exchanges, the ministry said, without outlining the amount of money involved.

China banned trading in cryptocurrencies in 2019 and is increasingly tightening restrictions on bitcoin mining.

In April, the northern region of Inner Mongolia closed down all its cryptocurrency mines, claiming they failed to meet annual energy consumption targets.

Ban on cryptocurrency mining

The region accounted for eight percent of the computing power needed to run the global blockchain — a set of online ledgers to record bitcoin transactions.

That is higher than the amount of computing power dedicated to blockchain in the entire United States.

The northwestern province of Qinghai announced a similar ban on cryptocurrency mining on Wednesday, but no data is available about the size of the operations in the region.

Bitcoin values tumbled in May on the back of a warning by Beijing to investors against speculative trading in cryptocurrencies.

China is in the midst of a wide-ranging regulatory crackdown on its fintech sector, whose biggest players have been hit with large fines after being found guilty of monopolistic practices.

Source: Wall Street Journal