Chinese crypto addresses sent $ 2.2 billion to scams and darknets in 2019-2021

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Most cryptocurrency-based money laundering activities involve traditional digital currency exchanges, often through over-the-counter offices whose businesses are built on these platforms.

Chinese cryptocurrency addresses sent more than $ 2.2 billion worth of digital tokens to addresses linked to illegal activities such as scams and darknet operations between April 2019 and June 2021, according to a report from the platform. Chainalysis blockchain data released on Tuesday.

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These addresses also received $ 2 billion in cryptocurrency from illicit sources, making China a major player in digital currency crime, he added. The report analyzes China’s cryptocurrency activity amid government crackdowns.

Read also | Why is China cracking down on cryptocurrencies?

However, the volume of transactions in China with illicit addresses has declined significantly over the two-year period in terms of absolute value and relative to other countries, Chainalysis said. The main reason is the absence of large-scale Ponzi schemes such as the 2019 scam involving the crypto wallet and the PlusToken exchange originating in China, he noted.

Users and customers lost around $ 3-4 billion to the PlusToken scam.

The vast majority of China’s illegal crypto fund movements are linked to scams, although this has also declined, according to the Chainalysis report.

Read also | British police seize record $ 408 million in cryptocurrency

“This is likely due to both the awareness generated by PlusToken and the crackdown in the region,” Gurvais Grigg, global director of public sector technology at Chainalysis, said in an email to Reuters.

The report also cited the trafficking out of China of fentanyl, a very potent narcotic pain reliever prescribed for severe pain or after surgery.

Chainalysis described China as the hub of the global fentanyl trade, with many Chinese producers of the drug using the cryptocurrency to conduct transactions.

Money laundering is another notable form of crypto-based crime disproportionately practiced in China, Chainalysis said.

Read also | Crypto exchange Binance to double compliance staff as regulators turn

Most cryptocurrency-based money laundering activities involve traditional digital currency exchanges, often through over-the-counter offices whose businesses are built on these platforms.

Chainalysis noted that China appears to be taking action against companies and individuals facilitating this activity.

He cited Zhao Dong, founder of several Chinese OTC companies, pleading guilty in May to money laundering charges after being arrested last year.

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