• China increases its repression against virtual currencies and money laundering.
• The Inner Mongolia region prohibits cryptocurrency mining.
China’s government officials have paid more attention to cryptocurrency mining to avoid money laundering. So far, China has arrested 1,100 people engaged in fraudulent business with cryptocurrencies. Security officials in the Asian country claim these illegal activities have become more frequent.
The mega Bitcoin mining rigs in the country comprise almost 80% of the global trade in cryptocurrencies. These high rates of crypto mining occur while the government prohibits decentralized trading. For weeks, authorities in China have prohibited companies from using cryptocurrencies as a means of payment.
China fights use of crypto for money laundering
Although money laundering can occur with any asset class, cryptocurrencies gain importance due to their anonymous trading. Crypto transactions are anonymous and only need a wallet and the amount you want to send. This ease in unknown transactions makes illegal businesses attracted to the market and is something China struggles with.
The country’s officials have taken strict measures to prevent the use of crypto in illegal business for money laundering. China’s police agency apprehended a group of more than 1,000 people who were involved in money laundering. China’s public security minister released the statement where he also alerted citizens about these fraudulent businesses.
Cryptocurrency money laundering network
The way these individuals operated to effect money laundering was brilliant and involved the crypto market. The launderers charged interest to customers who wanted to exchange their illicit income for virtual currencies. The country’s public security minister did not explain the ways the criminals bought cryptocurrencies.
Although the amount involved in money laundering is unknown, the criminals have been working with crypto transactions for years. In 2019, the government of China banned trading with cryptocurrencies and does not plan to relent on this measure. Rather, the authorities plan to hold on more to their actions against the crypto market.
In April, the northern part of Inner Mongolia banned and closed cryptocurrency mines because of their high energy consumption. Bitcoin mining can take a lot of energy and cause disasters like that in India weeks ago. The Inner Mongolia region had been in charge 8% of the computing power required to complete the blockchains.
The Qinghai province had also acted against the crypto market by banning bitcoin mining. Although there is no government-backed data for the north-western region, mining may account for over 3% of operations.
China is currently enforcing a great crackdown on cryptocurrencies, where it even prohibits their speculation through social networks. Many people have been found guilty of these decentralized businesses that the Chinese government doesn’t seem to be on good terms with.