China Targets Underground Bank in Major Crackdown on Crypto Transactions: Impact on Bitcoin (BTC) and Other Coins

China Intensifies Crackdown on Crypto-Driven Underground Banking

  • Chinese authorities have arrested six individuals involved in a cryptocurrency-driven underground bank.
  • The illicit operation involved currency exchange between the Chinese yuan and the South Korean won, totaling around 2.14 billion yuan ($295.8 million).
  • The suspects allegedly exploited the anonymity and decentralization of cryptocurrency to bypass China’s stringent capital control policies.

China intensifies its crackdown on cryptocurrency-related activities, targeting an underground bank that used digital assets to facilitate illegal foreign currency exchanges. The operation underscores the increasing challenges authorities face in regulating the crypto space.

Unraveling the Underground Operation

The illicit operation was uncovered in Jilin province, Northeast China, where local police arrested six suspects accused of facilitating illegal foreign currency exchanges using cryptocurrency. The suspects allegedly used domestic accounts to receive and transfer funds, conducting over-the-counter cryptocurrency transactions to service various companies. These included South Korean purchasing agents, cross-border e-commerce platforms, and import-export trade firms.

Exploiting Cryptocurrency Anonymity

The suspects are believed to have exploited the anonymity and decentralization features of cryptocurrency to carry out their operations, effectively bypassing China’s stringent capital control policies. This case highlights the increasing challenges authorities face in regulating the crypto space, as its inherent features can be manipulated for illicit activities.

China’s Stance on Cryptocurrency

China has consistently tightened its capital control policies over the years, prompting some to turn to cryptocurrency to circumvent these regulations. Earlier this year, the Supreme People’s Procuratorate and the State Administration of Foreign Exchange instructed prosecutors and forex regulators to strengthen their supervision of foreign exchange activities. The statement specifically highlighted cases where the Tether stablecoin was used as an intermediary to trade yuan with other currencies.


The crackdown on this crypto-fueled underground bank underscores China’s ongoing efforts to regulate the use of cryptocurrencies within its borders. As the country continues to tighten its capital control policies, it remains to be seen how this will impact the broader cryptocurrency market and whether other countries will follow suit in cracking down on similar operations.

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