China has announced the extradition of a suspect named Zhang from Thailand for his involvement in a multibillion-dollar crypto pyramid scheme. Zhang is allegedly the mastermind of the which has been in operation since 2012.
On August 23, the Chinese Ministry of Public Security (MSP) announced the extradition, noting that it is the first between the two countries for financial crimes under the 1999 China-Thailand extradition treaty. Although the ministry only gave the suspect surname, media reports claim he is Zhang Yufa, also known as Tedy Teow Wooi Huat, the founder of MBI Group, a Malaysian business conglomerate.
MSB Group pyramid scheme made over $14 billion in more than a decade
According to the MSP, Zhang has been the mastermind behind a scam syndicate since 2012. MBI Group claims it is a business conglomerate with diverse interests in resources and management developments. However, Zhang is wanted in Malaysia for fraud and fled the country.
The group reportedly defrauded millions by having them join the scheme for a fee between 700 yuan ($98) and 245,000 yuan ($34,300). Participants obtained their membership through a cryptocurrency and were promised high returns for their investments. With over a decade of operation, the scheme had attracted over 10 million members and generated more than 100 billion ($14 billion).
Chinese authorities became interested in the case in 2020 when the Chongqing Municipal Public Security Bureau started investigating it. the Interpol Bureau in China issued a red notice for Zhang in 2021, and the Thai police arrested him in 2022. However, judicial and administrative processes delayed his extradition until this year.
While the extradition represents a landmark move from China, it also highlights how residents of the country continue to trade and invest in cryptocurrencies despite the ban on it since 2021. Chinese authorities have continued to crack down on crypto trading and similar activities.
China classify cryptocurrencies as money laundering
Meanwhile, China took a stricter approach to cryptocurrencies last week after key government agencies included virtual asset transactions as forms of money laundering. The country’s Supreme Court and the Prosecutor General a new interpretation of the law on money laundering under Article 191, para 1, item 5 of the Criminal Law.
However, legal experts believe that including virtual currencies in anti-money laundering regulations does not imply that trading cryptocurrencies constitute money laundering. Instead, it means receiving virtual assets from illegal activities will be considered a crime. Therefore, the mere presence of virtual currencies does not automatically equate to criminal activity or money laundering.
Wu Blockchain, citing attorney Shao Shiwei, reported:
“If the funds come from the seven predicate crimes specified in the money laundering laws, it constitutes money laundering; if they come from other crimes, it constitutes concealment of criminal proceeds.”
This marks the first time cryptocurrencies have been included in money laundering laws. China’s decision to incorporate virtual currencies into the regulations is in response to the prevalence of money laundering cases. An official report indicates that the Supreme People’s Procuratorate prosecuted nearly 3,000 money laundering cases in 2023.
