‘OTC King’ Zhao Guilty of Unauthorized Crypto Operations, Says Chinese Legal Authority

Jimmy Aki
Last updated: | 1 min read
Zhao
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China’s Supreme Procuratorate has reportedly disclosed the details behind the seven-year prison sentence given to the founder of the over-the-counter (OTC) crypto trading desk RenrenBit, Zhao Dong.

In a press release on December 27, the Chinese legal authority revealed that the convictions were related to illegal business operations and unlicensed foreign exchange transactions.

The agency reportedly highlighted that the crackdown on the ‘OTC King’ and his associates was supported by substantial evidence, including bank records, communication logs, confessions, and witness statements.

This was closely followed by three public hearings, during which the defendants argued that their actions were digital currency transactions, not foreign exchange trading.

Despite their claims, the prosecutor presented chat records as evidence, resulting in a verdict that sentenced Dong to seven years in prison and a 2.3 million Chinese yuan ($325,000) fine.

Oversight on China’s Crypto Landscape Latest Trajectory


On December 24, local news outlets reported that China’s State Administration of Foreign Exchange had cracked an illicit forex ring operation that leveraged cryptocurrencies to bypass foreign exchange laws.

Xu Xiao, an official from Qingdao’s State Administration of Foreign Exchange, disclosed that underground banks were acquiring virtual currencies and selling them on international platforms to acquire foreign currency. This promoted an illegal exchange between the yuan and other currencies for profits.

As part of the investigation, authorities seized approximately $28,000 (200,000 Chinese yuan) worth of digital currencies, including assets such as Tether and Litecoin (LTC).

The scheme’s complexity became apparent as details unfolded, with over $2.2 billion (15.8 billion Chinese yuan) transferred to more than 1000 bank accounts spread across 17 different regions.

This intricate case underscores the formidable challenges regulatory bodies face in monitoring and controlling financial transactions within the dynamic landscape of digital currencies.

However, amidst these challenges, China maintains its commitment to fostering the growth and potential innovations stemming from crypto and associated technologies.

A noteworthy development that depicts this commitment is the $10 billion investment announced on December 28 by the Chinese venture capital (VC) firm GBA Capital to drive Web3 innovations.

The GBA Capital is looking to invest in startups dedicated to virtual reality, the metaverse, and non-fungible tokens (NFTs). This strategic funding initiative is expected to catalyze the transformation of the Guangdong-Hong Kong-Macao economic area into a prominent meta-asset capital.