Chinese Authorities in Guangdong Province Freeze 4,000 Banks Allegedly Linked to OTC Cryptocurrency Desks Engaging in Money Laundering

Authorities in China’s Guangdong province have reportedly frozen around 4,000 bank accounts which might be linked to money laundering operations through Bitcoin (BTC) and other cryptocurrencies.

Local sources said that Guangdong police officials have identified bank accounts that allegedly belong to virtual currency over-the-counter (OTC) traders who may be involved in illicit activities. Tether’s USDT stablecoin has allegedly been linked to several money-laundering operations in mainland China.

Chinese law enforcement agencies are currently investigating the matter, local media reports confirmed.

There have been many reports claiming that Chinese virtual currency investors have been buying cryptocurrencies from OTC sellers in order to engage in money laundering.

At present, police officials in China are examining blockchain data to identify suspicious transactions.

China has seen an increase in illegal activity involving digital currencies. Fines for anti-money laundering (AML) violations in 2020 have already exceeded the total from last year.

Scams involving virtual currency businesses appear to be on the rise, globally. Billions of dollars in illicit cash was allegedly laundered via Danske Bank, with the help of licensed crypto firms in Estonia.

The nation’s authorities have taken away over 500, or a third, of total licenses they had granted this year to virtual currency firms. This, according to Madis Reimand, who leads the nation’s Financial Intelligence Unit.

The licenses were revoked as these firms are suspected of using their permits to carry out or facilitate illegal activities.

CipherTrace, a data and cyber-security firm entrenched in the crypto-asset sector, recently reported that nefarious activities involving digital currencies have netted $1.36 billion during the first 5 months of 2020. These figures reportedly put 2020 on track to be a banner year for the bad guys (perhaps topping 2019s $4.5 billion stolen).

In January 2020, Chainalysis reported that Binance, Huobi, and other major exchanges were used to transfer $2.8 billion in Bitcoin to criminals in 2019.

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