China uncovers 1.6 billion yuan virtual currency money laundering case! Shanghai prosecutors reveal underground bank methods

Shanghai Baoshan District Procuratorate uncovers a major virtual currency money laundering case involving a total amount of 1.8 billion yuan. The criminal gang used Bitcoin and Tether to carry out a three-stage cross-border laundering process of “RMB-virtual currency-foreign currency.” Prosecutors successfully cracked the case by penetrating fund accounts and tracking electronic data.

How the 1.8 Billion Black Money Is “Washed” Through Virtual Currency

When details of a virtual currency money laundering case involving as much as 1.8 billion RMB were made public, people realized that the anonymity and cross-border nature of digital currencies had become a “high-speed channel” for criminals to move illicit funds. Traditional money laundering methods often require complex circulation through multiple physical accounts, leaving traces easily. In contrast, virtual currencies, with their decentralization, anonymity, and global circulation, seem to provide criminals with an ideal “invisibility cloak.”

The investigating prosecutors recalled: “This gang involved numerous accounts, with large-scale transactions, making the case very difficult.” In this case, criminals exchanged illegal funds into digital currencies like Bitcoin and Tether via virtual currency trading platforms, then sold them abroad through overseas channels to convert into foreign currencies, completing the cross-border “RMB-virtual currency-foreign currency” laundering process, attempting to “whitewash” the black money.

Three Stages of Virtual Currency Money Laundering

Stage One (Depositing): Disperse illegal proceeds in RMB across multiple bank accounts to evade large transaction monitoring.

Stage Two (Conversion): Convert RMB into Bitcoin, Tether, and other anonymous digital currencies on virtual currency trading platforms.

Stage Three (Withdrawal): Sell virtual currencies on overseas exchanges for USD, EUR, and other foreign currencies to complete cross-border transfer.

Money laundering crimes are never isolated; they often accompany upstream crimes such as corruption, drug trafficking, and financial fraud. The core purpose is to sever the connection between illegal gains and criminal activities, disguising them as legitimate income to evade legal sanctions, ultimately threatening national financial security and social stability. The concealment features of virtual currency laundering are even stronger; once funds flow abroad, tracking becomes exponentially more difficult.

Penetrating Investigation to Break Through Digital Fog

Faced with complex virtual currency laundering crimes utilizing new technologies and business models, traditional investigative methods face challenges. The key lies in “penetration”—breaking through the anonymity of virtual accounts and the layers of transferred funds. Baoshan District Procuratorate shifted from a “passive case acceptance” approach to an “active case seeking” strategy, guiding public security authorities to “penetrate fund accounts” and clarify the source and destination of funds.

By tracking the money chain and fixing electronic data, prosecutors perform precise surgical removal of the criminal core. They adhere to the principle of “dual investigation in one case,” ensuring that while upstream crimes are investigated, downstream virtual currency laundering clues are not overlooked. In one occupational crime case, prosecutors used this penetrating review to follow the trail, successfully supervising 24 individuals and thoroughly investigating the entire crime chain.

Securing evidence is another major challenge. Prosecutors must filter and analyze vast amounts of electronic data, searching for clues in chat logs, transaction records, and wallet addresses, constructing an irrefutable evidence system to precisely charge the crime. Although virtual currency transactions are anonymous, each transaction leaves an immutable record on the blockchain. Prosecutors leverage this feature to trace the final flow of funds.

Collaborative Action to Recover 7.5 Million in Stolen Funds

Anti-money laundering is a systemic battle that cannot be accomplished by a single entity. Baoshan District Procuratorate deeply understands this and took the lead in signing tripartite agreements with the District Supervision Committee and District Public Security Bureau, establishing a “one-game” coordinated strike pattern. They share clues, conduct joint analysis, and form a combined force against virtual currency money laundering crimes.

Under this cooperation mechanism, the efficiency of asset recovery has greatly improved. For example, in Wu’s money laundering case, thanks to close coordination, the suspect returned 7.5 million yuan in stolen funds during the review and prosecution stage. Additionally, the procuratorate continues to summarize experience and translate case handling practices into guiding templates for similar cases. Several cases they handled have been selected as typical financial procuratorate cases in Shanghai, providing a “tactical manual” for future efforts against similar crimes.

As the involved personnel are lawfully punished, this major virtual currency money laundering case has been temporarily concluded. The main offender was sentenced to seven years in prison and fined heavily, sending a clear legal warning. However, the fight is not over. Criminal methods continue to evolve, and anti-money laundering defenses must be continuously strengthened.

How the Public Can Prevent Becoming Money Laundering Accomplices

For the general public, this case is also a stark reminder. First, safeguard personal accounts and identity information; do not lend or sell bank cards or mobile SIM cards to others, as these could be tools for virtual currency laundering. Second, stay away from unknown source transactions, especially part-time jobs or investment projects that require virtual currency transfers, which are often traps for laundering.

Moreover, avoid participating in virtual currency speculation and trading; do not become part of the criminal chain for small profits. China enforces strict regulation on virtual currency transactions; any financial activity involving virtual currencies carries legal risks. Ultimately, under the rule of law, any attempt to “whitewash” illicit activities will eventually be exposed.

From strengthening departmental coordination to enhancing digital investigation capabilities, from improving laws and regulations to increasing public education, this battle for financial security will continue in every corner.