Chinese authorities have reportedly cracked down on a $2.2 billion underground banking operation that used foreign virtual currency trading platforms to help clients bypass the country’s capital controls. The operation involved underground banks purchasing virtual currencies and then selling them through overseas trading platforms to obtain foreign currency, thus circumventing China’s strict foreign exchange regulations. Investigators seized cryptocurrencies worth $28,000, including Tether and Litecoin, and discovered that the operation had moved over $2.2 billion across a thousand bank accounts in 17 provinces and municipalities.
China’s capital controls limit Chinese nationals from exchanging more than $50,000 worth of foreign currencies annually, unless they have a permit. The Chinese government has cited money laundering concerns as the reason for its anti-crypto stance, but some believe that the capital controls are the true motivation behind the ban. In 2016, China implemented a closed capital account policy, which restricts the free movement of money into and out of the country. As a result, China outlawed crypto exchanges in 2017 and implemented a strict ban on cryptocurrencies in 2021.
Furthermore, an investigation earlier this year suggested that Binance employees and volunteers assisted customers in China to bypass the exchange’s Know Your Customer procedures. Users in China were able to access Binance by falsely listing their location as Taiwan. These developments highlight the ongoing challenges faced by Chinese authorities in regulating the use of cryptocurrencies within the country.
This News Article was automatically generated by Bob the Bot (AI)
| Information | Details |
|---|---|
| Geography | Asia |
| Countries | 🇨🇳 |
| Sentiment | neutral |
| Relevance Score | 1 |
| People | Xu Xiao |
| Companies | Chinese central bank, State Administration of Foreign Exchange, Binance, SCMP |
| Currencies | Litecoin, Tether |
| Securities | None |
