Written by Hazel J. Greene, Senior Analyst

Chinese authorities have achieved a significant milestone in their ongoing battle against illicit activities involving cryptocurrencies. In a groundbreaking court ruling, the country has witnessed its first-ever cryptocurrency confiscation. This action came as a result of an extensive investigation into a massive cross-border online gambling case that involved the use of a virtual currency, amounting to an astounding turnover of 400 billion yuan (approximately $56 billion).

Chinese law enforcement officials conducting the investigation described the complexity of the case. According to their preliminary findings, the illegal operations involved over 5 participants, with the server located overseas. The perpetrators employed virtual currency, the most arduous medium for fund laundering, making it incredibly difficult to trace the origins of the funds and apprehend the main culprits located abroad. This revelation underscores the sophisticated methods criminals employ to exploit digital currencies and evade detection.

The case first came to the attention of authorities on July 28, 2021, when a resident of Shayang County in Hubei Province, Xiong Xong, reported his involvement in mobile phone gambling to the Jishan police station. Initially, a seemingly innocuous gaming experience became increasingly sinister when Xiong observed his acquaintances amassing substantial wealth through the activity. This prompted a thorough investigation that ultimately led to the revelation of an extensive international criminal network exploiting cryptocurrency.

In a commendable display of determination, over 130 individuals involved in the illegal gambling operation have been apprehended to date, and 14 suspected criminal gangs have been dismantled. The authorities seized crucial evidence, including computers, mobile phones, and bank cards, shedding light on the intricate workings of the criminal enterprise. Notably, this marks the first instance of virtual currency retrieval in China, a clear manifestation of the government’s commitment to tackling cryptocurrency-related crimes.

Qiu Moumou, believed to be the mastermind behind the operation, now awaits trial after a two-year-long effort by the authorities. It is important to note that gambling has been banned in China since 1949, and in September 2021, the country officially declared all cryptocurrency trading illegal. Despite initial bans in 2019, trading activities continued through foreign exchanges. While this prohibition has not deterred a significant number of Chinese individuals from engaging with cryptocurrencies, the recent confiscation serves as a stern warning against engaging in illegal activities.

Disclaimer: The information provided in this research report is for informational purposes only and should not be interpreted as financial or investment advice. The cryptocurrency market is highly volatile, and readers should conduct thorough research before making any investment decisions.