China’s Crypto Crackdown Falters: Billions in Illegal Bitcoin (BTC) Transactions Uncovered

<ul>
  <li>Chinese authorities uncover billions in illicit crypto despite a nationwide ban.</li>
  <li>Underground banks and illegal exchanges flourish as China’s crypto crackdown falters.</li>
  <li>About $86 billion of crypto flowed into China in the 12 months through June 2023.</li>
</ul>
<p><strong>Chinese authorities uncover billions in illicit crypto transactions, highlighting the challenges of enforcing a nationwide ban.</strong></p>
<h2><strong>Continued Crypto Activity Despite Ban</strong></h2>
<p>Recent developments in China suggest the continued use of cryptocurrencies despite an existing ban by the government. Multiple raids by the Chinese police uncovered the use of cryptocurrencies for illicit transactions totaling billions of dollars.</p>
<h3><strong>Underground Banks and Illegal Exchanges</strong></h3>
<p>A Bloomberg report revealed that in May, the police in China discovered an underground bank linked to 13.8 billion yuan, or $1.9 billion worth, of illegal transfers. They uncovered a gang implicated in the unauthorized conversion of about 2 billion yuan, and multiple unlawful money exchanges involving transactions worth over 1 billion yuan.</p>
<h2><strong>Widespread Crypto Use Across China</strong></h2>
<p>The outcome of these discoveries suggests a significant presence of Chinese traders actively participating in the cryptocurrency market. Furthermore, the police located the suspects around Beijing, the northeastern province of Jilin, and Chengdu City in the southwest, raising the possibility of a widespread practice across the entire country.</p>
<h3><strong>Reasons Behind the Crypto Ban</strong></h3>
<p>It is worth noting that it has been two years since the Chinese authorities imposed a ban on cryptocurrency transactions within the country’s borders. The government cited money laundering, currency outflows, and environmental harm from energy-intensive Bitcoin mining as the reasons behind its crypto ban.</p>
<h2><strong>Continued Involvement in Digital Assets</strong></h2>
<p>However, there is a belief that Chinese citizens are still involved with digital assets. While many use it as an alternative investment amid falling property prices, others utilize crypto as a channel for circumventing overseas transfer limits.</p>
<h3><strong>Lack of Strict Enforcement</strong></h3>
<p>In a statement, Chengyi Ong, APAC policy head at Chainalysis Inc., noted that a significant amount of crypto activity remains in China. According to Ong, this may be a result of the lack of strict enforcement of the ban. Nevertheless, he acknowledged that the decentralized and peer-to-peer nature of crypto activities could be contributing factors.</p>
<h2><strong>Substantial Crypto Flow into China</strong></h2>
<p>As reported by Chainalysis, about $86 billion of crypto flowed into China in the 12 months through June 2023. The blockchain firm acknowledged the volume to be substantial, despite being significantly down from pre-ban levels.</p>
<h3><strong>Conclusion</strong></h3>
<p>The recent discoveries by Chinese authorities underscore the challenges of enforcing a nationwide crypto ban. Despite the government's efforts, significant crypto activity persists, driven by underground banks and illegal exchanges. The substantial flow of crypto into China highlights the continued interest and involvement of Chinese citizens in digital assets. Moving forward, the effectiveness of the ban will likely depend on stricter enforcement and addressing the underlying reasons for crypto use.</p>