In a significant move, China’s State Administration of Foreign Exchange (SAFE) has targeted an underground bank engaging in illicit exchange services using cryptocurrency. The operation, discovered by Qingdao police, involved over 1,000 bank accounts associated with a Chinese national named Jin. This individual facilitated the exchange business, channeling a staggering 15.8 billion yuan ($2.2 billion) to purchase cryptocurrencies on overseas exchanges and offer yuan exchange services.
The illegal exchange operation spanned across 17 provinces in China, orchestrating more than 20 million transactions. The accounts linked to Jin, operating as funneling accounts, were traced in the crackdown. Li, a textile worker, acted as a broker, managing the purchase and sale of virtual currencies. Notably, the report emphasized the illegality of managing and exchanging cryptocurrencies in China.
Xu Xiao, an inspector at the Qingdao Branch of the State Administration of Foreign Exchange, explained the modus operandi of the illicit process. Underground banks would acquire virtual currencies and subsequently sell them through overseas trading platforms, obtaining the necessary foreign currency. This maneuver, according to Xiao, constituted the illegal act of buying and selling foreign exchange. The report reiterated that such exchanges must be conducted at state-designated locations.
Despite the lure of favorable exchange rates and convenience, SAFE authorities warned against participating in these illegal practices. Huang Hui, Deputy Director of SAFE’s Management and Inspection Department, emphasized the ongoing commitment to collaborating with other state institutions. The objective is to crack down on illegal exchange businesses like underground banks and promote the use of legal channels for financial operations.