Thousands of Bank Accounts of Crypto OTC Traders in China’s Guangdong Are Frozen by Local Police
About four thousand bank accounts involved in money laundry of crypto OTC traders have been frozen by local police from Jun. 4 in China’s Guangdong province.
The reason for card frozen is that the telecom fraud is being severely investigated by Chinese police recently as OTC trading of USDT is frequently used for money laundering.
Capital from telecommunication fraud, gambling, and crypto scam may lead to bank account frozen. Unfortunately, at present, these are the main capital source apart from the institutions. Therefore, bank account frozen may become more and more frequent in the future.
Money laundering by crypto OTC trading is not new in China, Chinese police busted a major cryptocurrency scam suspected of using cryptocurrency OTC transactions for money laundering not long before. The scammers created a forged Huobi website to defraud, and then carry out OTC money laundering by a group to transfer the money obtained from the fraud to an overseas account, according to local police in Guangzhou, a city of Guangdong province in south China, according to 8btc’s previous report.
Another retail investor, suddenly found that his bank account had been frozen after using fiat money to buy cryptocurrency on a major exchange a week ago. Many OTC traders confirmed that there was a large number of “reverse freezing” recently after the retail investors bought cryptocurrency from OTC sellers. Generally speaking, the vast majority of bank account frozen are due to “receiving black money”, and it is rare to see “reverse frozen” after purchasing cryptocurrency.
The direct reason should be that there is a problem with the seller’s bank card which receiving fiat money. Under the strict inspection of Guangdong’s police, there will be collective freezing of related multi-level accounts. The police even analyze the data on the chain, so that there will be more sellers e involved in capital flow and frozen cards.
However, some insiders pointed out that the “reverse freezing” is relatively less suspected, it’s easier to unfreeze the account. However, there is no unified standard for Chinese police in different areas to handle crypto-related cases because of their different understanding and processing methods for cryptocurrencies.
Since the first quarter of this year, China’s central bank has made unprecedented efforts in anti-money laundering, as the fines related to anti-money laundering have almost equal to last year. Many enterprises engaged in OTC, transaction, loan in the crypto space have been investigated more frequently recently by the local financial bureau and the police.
38 branches of the central banks in 18 provinces issued 94 anti-money laundering fines to 93 anti-money laundering obligors and relevant responsible persons, with a total penalty amount of 183 million Chinese yuan in Q1. The penalty amount increased nearly four times year-on-year, and the number of penalties increased by more than 50%.
Some trading accounts have not been traded for many months still get frozen in this crackdown, resulting in a large number of people involved. At present, there is a lot of evidence showing an OTC transaction team is to blame, because the merchants’ accounts associated with it all have been frozen.