A local Chinese bank, Bank of Huludao, recently discovered a “sophisticated fraud” and crypto-money laundering scheme organized by two of its former senior executives.
The scandal, which caused an uproar in the financial community, involved the illegal transfer of 1.8 billion yuan (about $248 million). These findings highlight the dangers within financial institutions and the ways people use these systems to exploit them for their own gain.
Cryptocurrency and Cross-Border Laundering
As reported by the Chinese newspaper National Business Daily, the scheme was not limited to the misuse of funds but extended to “sophisticated fraud tactics” involving cryptocurrencies.
A detailed investigation and court documents revealed that the former officials, Li Yulin and Li Xiaodong, used their positions in the bank to embezzle funds that were intended to settle non-performing assets.
In the months following the fraud, they and their accomplices converted these funds into foreign currency and deposited them into company accounts they controlled in Hong Kong. The next steps involved secret operations where funds were invested in cryptocurrencies.
Through platforms such as WeChat and various cryptocurrency trading groups, particularly one called “Longmen Inn,” the defendant purchased large amounts of cryptocurrency.
These digital assets were sold abroad, and the proceeds were received through US dollar transactions in Hong Kong bank accounts.
Such oversight appears to have concealed their illegal activities and capitalized on the regulatory ambiguity associated with cryptocurrencies.
Legal Consequences And Broader Consequences
According to the report, the court has already taken strict action against one of his accomplices, 44-year-old Chen, sentencing him to two years in prison and imposing a heavy fine for his role in embezzling part of the embezzled money. .
Notably, the case came as China stepped up its crackdown on cryptocurrency-related crimes. Despite the country’s strict anti-crypto laws, the allure of digital currencies to hide illegal transactions remains high.
Recent months have seen a few high-profile breakouts. Last month, state law busted a secret banking network that used digital currencies in unauthorized transactions involving about 2.14 billion yuan ($295.8 million).
This network primarily facilitated the conversion of Chinese yuan into South Korean won, bypassing established currency exchange rules.
Additionally, in the same month. Chinese police have broken up a widespread underground banking operation suspected of using Tether’s USDT stablecoin for illegal transactions. This extensive network, which operates across multiple states, is reported to have handled over two billion dollars worth of transactions.
As reported by Bitcoinist, citing local media reports, the Chengdu Municipal Public Security Bureau revealed that this underground system operates within 26 provinces and regions, resulting in the arrest of 193 people and the initiation of 58 criminal cases by various public security departments.
Authorities seized 149 million yuan linked to these illegal activities as part of their enforcement actions.
The featured image was created with DALL-E, a Chart from TradingView
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