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Chinese Addresses Have Sent Over $2.2 bln Crypto Into Illicit Activities So Far

Chinese addresses have sent over $2.2 billion worth of cryptocurrency to addresses associated with illegal activities, the latest report by blockchain data platform, Chainalysis, has pointed out.

The data, services and research provider made the report as it seeks to shed light on China’s historical role in the cryptocurrency ecosystem as well as its current strategy in the changing landscape.

“Between April 2019 and June 2021, Chinese addresses have sent over $2.2 billion worth of cryptocurrency to addresses associated with illicit activity such as scams and darknet market operations, and received over $2.0 billion,” it states, hinting at China being a crucial part of the overall cryptocurrency ecosystem and would have also historically played a large role in cryptocurrency-related crime.

It follows a key highlight of the report which is that wallet addresses estimated to be controlled by users in China have received over $150 million worth of cryptocurrency since January 2021, second only to the United States.

Meanwhile, it also pointed out that despite China remaining one of the top-ranked countries for illicit transaction volume, its transaction volume with illicit addresses has fallen drastically over the time period studied, both in terms of raw value and in relation to other countries.

The wide margin that China has been using to beat all others has reduced and cryptocurrency-related crime in the country has fallen, Chainalysis notes.


Crypto crackdown affects Chinese miners more

From having one of the most active cryptocurrency industries in the world and an influential user base, China’s place in the wider cryptocurrency ecosystem may be changing.

It cites China’s hostility toward cryptocurrency despite Chinese miners having historically been dominant – even controlling up to 65% of global hash rate at some point and dominating the mining equipment industry as well – in the crypto mining space.

China started cracking down on crypto mining activities within its borders after a May 2021 statement in which the Chinese Vice Premier Liu He and the State Council said that it is necessary to “crack down on Bitcoin mining and trading behavior” to protect the country’s financial system.

The aftermath of the crackdown is what appears to indicate that mining pools headquartered in China or connected to Chinese cryptocurrency businesses were hit harder than others. 

Chainalysis notes that while AntPool, Poolin,, and F2Pool, all of which are primarily based in China, seem to have seen the steepest declines,  the Czech Republic-based SlushPool hasn’t seen its mining figures decline. 


What to achieve with digital yuan

The report also analyzed China’s  strategy and intentions for the digital yuan which it appears intent on developing for immediate domestic use, and possibly future international use. It says there could be a possibility that the “financial death sentence” would exist under the digital yuan system. 

This could be as a result of Chinese citizens not having financial privacy under their current banking system. In that case, the lapse would enable the digital yuan to give the government the ability to exclude individuals or businesses from the financial system for any infraction, the analysis suggests.  

It adds that a centralized and government-owned ledger of citizens’ transactions could also be easily turned into a tool for authoritarianism and financial surveillance.




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