China cracks down on $2.2 billion illegal banking transactions with crypto
China cracks down on $2.2 billion illegal banking transactions with crypto
China continues to crack down on illegal cryptocurrency trading that contributes to capital flight from the country.
China's foreign exchange police uncovered an underground bank and banned a $2.2 billion illegal operation. The operation used foreign cryptocurrency trading platforms to circumvent capital controls in the country, Cointelegraph reported.
"The underground banks buy cryptocurrency and then sell it through foreign trading platforms to
get the foreign exchange they need," Xu Xiao, an inspector with the Qingdao branch of the State Administration of Foreign Exchange, told Cointelegraph.
"This process constitutes the illegal act of buying and selling foreign exchange," he added.
Cryptocurrencies worth $28,000, including assets such as Tether and Litecoin, were seized from the bank during the operation.
Chinese law limits its citizens to exchanging foreign currency up to $50,000 per year. Exceeding this limit without proper authorization is considered money laundering.
Although the Chinese government has imposed strict restrictions to prevent money laundering through cryptocurrencies, many economists believe that capital controls are the main reason for such actions.
In 2016, China required banks, companies, and individuals to adhere to a "closed" capital account policy, meaning that money cannot freely move in or out of the country unless it meets government requirements to prevent capital outflows.
In 2017, the Chinese government banned cryptocurrency exchanges, and in 2021, it imposed a strict ban on cryptocurrencies, which remains in place to this day.
Also read: Changpeng Zhao's wealth increased by $25 billion in 2023.
