China: 16 People Detained for Money Laundering via Cryptocurrencies

Police 1 -- scammers 0. Sixteen individuals have been detained in China for their alleged involvement in a money laundering network using cryptocurrencies. According to reports from specialized media, the organization was recycling funds from telephone scams by recruiting individuals willing to provide their bank cards and payment accounts. Authorities describe a "family-like" structure, where personal relationships facilitated recruitment and the flow of money. However, no specific amounts, digital assets, or blockchain networks have been disclosed at this stage.

Key Points {#h-key-points}

• Sixteen suspects detained in China for laundering cryptocurrency proceeds from a telephone fraud network
• Typical circuit: rented bank accounts, "paofen" splitting platforms, then conversion to USDT on the TRON network
• Since August 2024, a Chinese judicial interpretation explicitly categorizes transactions in virtual assets as money laundering activities
• On-chain traceability has led to a record seizure of 127,271 bitcoins linked to the Cambodian conglomerate Prince Group

Rented Bank Accounts to Obfuscate the Origin of Funds {#h-rented-bank-accounts-to-obfuscate-the-origin-of-funds}

The network reportedly used accounts belonging to individuals as the first step of the laundering process. Funds from scams would thus pass through several holders before being converted or moved using cryptocurrencies.

This method allows organizers to remain distanced from the initial transfers and multiply intermediaries. Account holders may receive a commission but also expose themselves to prosecution if they know their payment methods are being used to transfer suspicious funds.

In fraud cases in China, criminals regularly use rented bank accounts and networks called "paofen", which distribute funds among many accounts before their eventual conversion into cryptocurrencies.

The Supreme People's Court itself acknowledges that these tools have become common vectors for money laundering. However, this does not prove that all three techniques were employed in this specific case.

The term "family-like" does not necessarily mean that the 16 suspects belonged to a single family. It rather describes an organization based on close relationships and trust, used to recruit proxies and control accounts.

China Now Integrates Cryptocurrencies into Its Anti-Money Laundering Arsenal {#h-china-now-integrates-cryptocurrencies-into-its-anti-money-laundering-arsenal}

Since 2021, mainland China has regarded cryptocurrency exchange and intermediation services as illegal financial activities. This ban has not eliminated their criminal use but has shifted some transactions to informal circuits or platforms located abroad.

The penal framework was clarified on August 20, 2024. A joint interpretation by the Supreme People's Court and the Supreme People's Procuratorate explicitly cites transactions in "virtual assets" among the methods that may be used to transfer or conceal criminal proceeds. The official text thus allows for more direct prosecution of the conversion of fraudulent funds into cryptocurrencies.

The new Chinese law against money laundering, which came into effect on January 1, 2025, has also strengthened vigilance and cooperation mechanisms among authorities. The official framework complements the law against telephone and online fraud, already used against the sale or rental of accounts.

Ultimately, this arrest illustrates a hybrid model: scams originate online, but their laundering still relies on real bank accounts and individuals recruited as intermediaries. Cryptocurrency serves here as a presumed transfer tool but not the source of the fraud.

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