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More Crypto OTC Traders’ Bank Accounts Got Frozen in China

More bank accounts of cryptocurrency over-the-counter (OTC) traders have been frozen as Chinese police have been ramping up efforts to crack down on illicit activities.

Apart from OTC traders, a majority of bitcoin miners have also complained about similar cases. A miner in Sichuan told us that his bank account had recently been frozen by the police in Dongguan, a city in central Guangdong province.

A local police replied via phone that they are conducting an investigation over a severe telecom fraud, frozen accounts are not necessarily involved in wrongdoing and supposedly can be unfrozen if the authority finds the account has nothing to do with “dirty money”.

Prior to it, 8btc has reported that about 4,000 bank accounts have been frozen since June 4 on the suspicion that their transactions may have been contaminated by money-laundering activities.

Since cryptocurrencies and the U.S. dollar-pegged stablecoin tether (USDT) are popular choices to transfer high-risk capital in China, there are a number of OTC market makers doing the business in the middle, converting the ‘grey earnings’ using open markets.

Miners, who prefer OTC trades instead of going through exchanges, usually have familiar OTC matchmakers to help facilitate their crypto selling. The incident resulting in the massive freezes is rumored to be related to an OTC market maker who has been caught up in the police probe over illicit activities.

As thus, OTC transactions on mainstream exchanges are in fact not that severely affected as they are rumored to be.

Most mainstream platforms say they have close cooperation with the police and even would take the initiative to cut off the “dirty money” and block some suspicious merchants.

Crypto exchange Huobi told us that they have been developing a system since 2018, which has helped authorities in Fujian and Hunan carry out anti-fraud and anti-money laundering work.

According to an OTC trader, the police probe has lasted for months, with many trading accounts being inactive and frozen during the period, leading to a quite large number of traders affected. Evidence points to a team of OTC traders in the industry as the cause as most accounts of traders associated with them have been frozen.

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