Crypto ‘trading platforms’ were part of $2.2B illegal Chinese forex ring: report

Chinese authorities have reportedly seized a $2.2 billion underground banking operation that allegedly used foreign “virtual currency trading platforms” to help clients bypass the country's capital controls.

On December 24, news spread on Chinese social media that China's foreign exchange police had found an underground bank using crypto to bypass forex restrictions.

Xu Xiao, inspector of the Qingdao branch of the State of Foreign Exchange, said: “Onshore banks buy virtual currencies and sell virtual currencies on foreign trading platforms to get the foreign currency they need.”

“This process will end the exchange of yuan and foreign currencies, which is an illegal act of buying and selling foreign currency,” he said.

Investigators reportedly seized more than $28,000 (200,000 Chinese yuan), including Tether, although the entire operation moved more than $2.2 billion (15.8 billion Chinese yuan) from more than a thousand bank accounts in 17 provinces and municipalities. , according to the report.

Chinese laws restrict Chinese people from exchanging more than $50,000 in foreign currency each year unless they have a permit. Moving them is considered money laundering by the government.

Some believe these capital controls are the real reason behind China's anti-crypto stance. The Chinese government says the ban is because proceeds of crime are being used to legitimize crime.

In the year In 2016, China issued strict foreign exchange regulations requiring banks, companies and individuals to adhere to a “closed” capital account policy.

This means that money cannot move freely in and out of the country unless these strict government-controlled laws are followed to prevent capital flight.

A year later, China banned crypto exchange in the country. In the year In 2021, China implemented a strict ban on cryptocurrencies, which continues today.

Related: China's central bank urges the world to jointly control crypto

An investigation in March alleged that Binance employees and volunteers helped customers bypass Know Your Customer (KYC) procedures in China.

On December 23, SCMP reported that users in China accessed Binance by falsely listing their location as Taiwan.

Magazine: The real reason for China's war on crypto, 3AC judge's embarrassing mistake: Asia Express