China Is a Large Player in Cryptocurrency-Related Crimes: Chainalysis Report

The blockchain data provider Chainalysis revealed that Chinese cryptocurrency accounts had sent over $2.2 billion worth of digital assets to addresses tied to criminal activities such as frauds and darknet transactions in a period of around two years. However, large-scale Ponzi schemes are less popular in China than in other countries.

Cryptocurrencies Fueled Illegal Operations in China

According to a research conducted by the blockchain data platform Chainalysis, Chinese crypto wallets transferred more than $2.2 billion worth of virtual assets to accounts related to money laundering, drug trafficking, and other illegal activities between April 2019 and June 2021. These addresses also received a further $2 billion in cryptocurrencies from criminal sources.

Even though the numbers seem high, they have fallen drastically over the two-year period compared to other countries. Chainalysis explained that the main reason behind it is the fact that large-scale Ponzi schemes are not that common in the world’s most populated nation anymore.

However, it noted that China is the hub of the global fentanyl trade, stating that many drug producers employ digital assets to execute transactions.

Chinese criminals involved in money-laundering operations also use virtual currencies and crypto exchanges in their affairs. What’s more, some of them have even built their illegal companies on top of these trading venues.

Per Chainalysis, the Asian nation takes measures against such bad actors and gave an example with the founder of several Chinese over-the-counter (OTC) businesses – Zhao Dong. He pleaded guilty in May to money laundering crimes after being arrested by the authorities earlier for assisting internet illegal activities.

11 Years in Prison for Members of a Chinese Crypto Scam

While cryptocurrency frauds and employing digital assets in scams are common in China, the country’s authorities impose severe punishments on those involved in such criminal affairs.

As CryptoPotato reported at the end of 2020, principal actors in the PlusToken Ponzi scheme will spend the next 11 years in jail. The scam managed to defraud investors of $2.25 billion worth of virtual currencies.

The officials highlighted the operation as a major win since it was one of the largest Ponzi schemes ever occurred in China. In addition to the imprisonment, the authorities fined two of the key members of  PlusToken with fines of respectively $18,000 and $913,000.