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Chinese Criminal Gang Sentenced for Laundering Money with Digital Yuan

Hongji Feng
Last updated: | 1 min read
money laundering

A criminal gang in China has been sentenced for money laundering using digital yuan in an international scheme.

According to a report by Mpaypass, the People’s Procuratorate of Yuecheng District, Shaoxing, handled the case where suspects Yuan, Zhang, and Kou were found guilty of using digital yuan accounts to cash out and conceal criminal proceeds.

Money Laundering Using Digital Yuan and Crypto

In August 2023, Yuan saw a part-time job advertisement on social media and decided to give it a try. The advertiser asked Yuan to cash out vendors’ digital yuan wallets with a commission of 0.8%.

Yuan started by purchasing cryptocurrency and sending it to the advertiser as a deposit. Once Yuan found a merchant with digital yuan wallets, he would pass the e-CNY receiving QR code to the advertiser and the latter would transfer the money to the merchant.

Upon receiving the money, the merchants would usually charge a “service fee” of 1% to 1.5% and return the remaining amount to Yuan in banknotes. As long as Yuan could find vendors with available digital yuan wallets, the laundering would keep going.

After a few operations, Yuan became quite familiar with the process. “I didn’t expect the money to come this fast; doing it alone is too slow,” stated Yuan.

Yuan Recruits More to Expand Operation

Although aware of the dubious origins of the advertiser’s money, Yuan could not resist the temptation and involved his girlfriend, Zhang, and friend, Kou, promising them 50 yuan for every 10,000 yuan they helped cash out, to earn a difference.

As not many shops with e-CNY accounts agreed to such operations and repeated actions could be easily noticed, to avoid police action, the gang usually contacted the advertiser using unregulated messaging apps from overseas.

Starting from early September, they moved around cities in Zhejiang province, driving to new crime locations after successful cash-outs, laundering the fraudulent money of over 200,000 yuan.

“Digital yuan transactions have strong privacy, and overseas fraud syndicates also use this feature to buy some merchants’ accounts for money laundering,” confessed Yuan.

The court recently sentenced the gang to fixed-term imprisonments ranging from one year and four months to seven months, and fined them for concealing and disguising the proceeds of crime.