China freezes crypto traders’ bank accounts

Move against several thousand individuals was part of an extensive crackdown on illicit activities

China freezes crypto traders’ bank accounts

Several thousand bank accounts belonging to cryptocurrency traders have reportedly been frozen by Chinese police as a result of an extensive crackdown on illicit activities, Bitcoin.com reported.

The police in China’s Guangdong province have been freezing bank accounts of over-the-counter (OTC) cryptocurrency buyers and sellers in the country. Chinese publication 8btc reported on Monday that about 4,000 such bank accounts have been frozen since June 4 on the suspicion of being involved in illicit activities, including money laundering.

Chinese police have been ramping up efforts to crack down on telecom fraud, gambling and cryptocurrency scams, which have resulted in them freezing related bank accounts. Some accounts have been frozen despite there being no any trading activities related to them for several months. According to the publication, the authority claims that the stablecoin Tether (USDT) is frequently used in illicit activities. 

The police are even learning about blockchain and on-chain analysis to understand how to trace crypto assets. However, frozen accounts are not necessarily involved in wrongdoing and supposedly can be unfrozen if the authority finds no evidence of illicit activities. One investor unexpectedly found that his bank account had been frozen after using yuan to buy cryptocurrency on a major crypto exchange a week ago, the news outlet said.

Recently, a major scam allegedly involving the use of cryptocurrencies for money laundering was busted. According to local police in Guangzhou, Guangdong province, scammers created a fake Huobi exchange website to defraud investors and transferred illegally obtained money to an overseas account.

The country’s central bank, the People’s Bank of China (PBOC), has been increasing efforts to crack down on money laundering. The publication noted that many crypto startups have been investigated by local financial bureaus and police. Since the PBOC closed down crypto exchanges in September 2017, people in China have been using peer-to-peer OTC trading to exchange between cryptocurrencies and yuan.

Meanwhile, cryptocurrencies are legal in China as several Chinese courts have ruled. The Shanghai No.1 Intermediate People’s Court, for example, ruled that bitcoin is an asset protected by law, and the Shenzhen Futian District People’s Court ruled that ethereum is legal property with economic value. In addition, China passed the Civil Code in May which protects cryptocurrency inheritance.