The first case of money laundering involving the use of digital yuan has been reported in China. According to Chinese authorities, in several scam cases, the group involved in the crime used the digital yuan to steal funds from their victims which were further transferred out of the country.

A total of 11 persons have been reportedly arrested in connection with this crime, which took place in the Xinmi province of China. According to officials from the Xinmi Public Security Bureau, the first victim of the suspected criminals was an individual from whom they defrauded 200,000 yuans (about $32,000).

The fraudsters were found to have leveraged a tech support scam in carrying out the act. After stealing from their victim, the group then used a digital yuan wallet to funnel the stolen funds out of the country. One of the suspected criminals is a 26 years old female from the province of Fujian.

Hoping not to get caught, the criminal gang is alleged to have adopted the use of the newly launched digital yuan wallet system. The funds stolen were transferred to their alleged partners in an account that is located in Cambodia. Perhaps, they were wrong to have assumed that their transaction could not be traced.

It will be recalled that part of the reasons claimed by China while working on the implementation of digital yuan is to enable the government to have full supervision of its financial transactions industry. This was one of the cornerstones that the government used to drive its points over the ban of cryptocurrencies and other decentralized digital currencies.

With the increasing trend of fraud, illicit transactions, and cases of money laundering, China being a global hub for cryptocurrencies at the time recorded a high rate of these financial crimes. Hence, tracking this case so early in the life of the digital yuan can be termed as a success by the supervisory authorities. However, it also raises concerns over the unrelenting efforts of criminals to test even new technologies for possible exploitation.

The digital yuan is already very popular in China, especially with the ban of cryptocurrencies in place. Already, over 140 million users have signed up for digital yuan wallets, with the number expected to keep rising.

Unlike cryptocurrencies that run on decentralized blockchains, the digital yuan relies on digital signatures and encrypted storage for transactional security and to prevent double-spending. It is enabled with peer-to-peer transaction capabilities and is also exposed to the kind of financial crimes that are associated with fiat currencies.

Therefore, the onus is on the government and financial security agencies to ensure the security of funds within the network. This is especially considering that the technology deployed may be new to a lot of users, hence the need for increased education and awareness about the workings of the CBDC.

Naturally, whenever a new tech arrives on the scene, bad players tend to hang around seeking opportunities to exploit unsuspecting victims. China has recorded its first case of money laundering using the digital yuan. This may not be the last attempt by cybercriminals who may seek to try their hands on different methods of financial crimes or graft.

Anti-graft agencies would need to be on the alert, but more importantly, as already mentioned, the public needs to be properly educated to avoid a situation where extortion, theft, and illicit transactions become the order of the day with the newly launched CBDC.