Chinese police have arrested 16 people suspected of operating a cryptocurrency money laundering network that helped launder proceeds from telephone scams through rented bank accounts and digital assets.
According to local reports, the group used a multi-stage laundering process, initially moving proceeds from fraud through bank accounts supplied by recruited individuals and then converting the funds into cryptocurrency.
Authorities described the operation as a “family-like” organization, referring to its reliance on close personal relationships to recruit participants and control financial accounts.
How the alleged scheme worked
Investigators said the network relied on individuals willing to rent out their bank cards and payment accounts, allowing scam proceeds to pass through multiple intermediaries before being transferred into cryptocurrencies.
Chinese authorities have long warned about so-called “paofen” platforms, which split illicit funds across numerous bank accounts to make transactions harder to trace, then convert them into digital assets. While officials cited these techniques as common laundering methods, they did not confirm that every element was used in this specific case.
Authorities have not disclosed the amount of money involved, the cryptocurrencies used, or the blockchain networks connected to the alleged operation.
China tightens crypto enforcement
Cryptocurrency exchanges and related financial services have been banned in mainland China since 2021. In August 2024, the Supreme People’s Court and the Supreme People’s Procuratorate officially identified virtual asset transactions as a possible way of laundering money, providing prosecutors with a clearer legal basis for prosecuting crypto-related cases.
China’s updated Anti-Money Laundering Law, which took effect on January 1, 2025, further strengthened cooperation between regulators and law enforcement while complementing existing laws targeting telecom and online fraud.
The push has continued this year. Earlier this month, the Supreme People’s Procuratorate called for further updates to China’s criminal framework for crypto-related money laundering, saying blockchain technology and virtual assets have made financial crimes more difficult to investigate.
Why the case matters
The recent arrests underscore the continued use of traditional banking channels, as well as cryptocurrencies, to launder the proceeds of illegal activity by criminal groups.
In this case, digital assets were allegedly used as only one step in a larger laundering chain of bank accounts controlled by recruited intermediaries. The probe also underscores China’s increasing emphasis on bolstering its legal arsenal to combat crypto-enabled financial crime. Authorities have not released any further details about the case, and the investigation is ongoing.
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