thecoinrepublic.com
- While China’s share of global illicit crypto flows has been declining since the third quarter of 2019, the country still accounts for a disproportionate amount of money laundering and fraud activities, according to a new analysis from Chainalysis
- The lack of big-scale Ponzi schemes like the 2019 PlusToken fraud accounts for a major part of the decline
- The authors of the study claim that Chinese over-the-counter (OTC) Bitcoin (BTC) brokers have played an outsized role in enabling money laundering for individuals involved in cryptocurrency-related crime based on historical transaction data
While China’s share of global illicit crypto flows has been declining since the third quarter of 2019, the country still accounts for a disproportionate amount of money laundering and fraud activities, according to a new analysis from Chainalysis. Chainalysis said on Aug. 3 that more than $2.2 billion in cryptocurrency was moved from Chinese wallets to addresses linked to illegal activities between April 2019 and June 2021 in its Cryptocurrency and China study.
More than $2 billion in digital assets linked to illicit behavior including frauds and darknet markets were sent to Chinese addresses. Despite this, the study claims that crime has decreased dramatically and that China’s unlawful transaction volume has decreased dramatically during the study period, both in terms of raw value and in comparison to other nations. The lack of big-scale Ponzi schemes like the 2019 PlusToken fraud accounts for a major part of the decline.
While China remains one of the top-ranked nations for unlawful transaction volume, it used to outperform all others by a considerable margin, implying that cryptocurrency-related crime in the country has decreased, Chainalysis noted. The authors of the study claim that Chinese over-the-counter (OTC) Bitcoin (BTC) brokers have played an outsized role in enabling money laundering for individuals involved in cryptocurrency-related crime based on historical transaction data. Although digital asset-based money laundering is still disproportionately carried out in China, the vast majority of illegal Chinese crypto flows have been linked to scam activities, according to the research.
According to Chainalysis, China’s central government made over 1,100 arrests in June related to digital asset-based money laundering, suggesting a readiness to crack down on the industry. It would be fascinating to observe if the arrests result in a decrease in illegal cash flowing to Chinese cryptocurrency companies and OTC traders.
China’s escalating efforts to crack down on conventional decentralized cryptocurrencies, according to Chainalysis, may jeopardize the country’s standing as a global crypto superpower in the future. China’s increasing antagonism against decentralized crypto assets is attributed to the country’s ambitions for widespread adoption of the digital yuan, according to the article.