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Chinese cryptocurrency addresses sent $ 2.2 billion to scams and Darknet in 2019-2021: report

By on August 4, 2021 0

Chinese cryptocurrency addresses sent over $ 2.2 billion (approx. Rs. 16,300 crore) in digital tokens to addresses linked to illegal activities such as scams and darknet operations between April 2019 and June 2021 , according to a report by blockchain data platform Chainalysis released on Tuesday.

These addresses have also received $ 2 billion (roughly Rs. 14,820 crore) in cryptocurrency from illicit sources, making China a major player in digital currency crime, he added. The report analyzes China’s cryptocurrency activity amid government crackdowns.

However, China’s transaction volume with illicit addresses has declined significantly over the two-year period in terms of absolute value and relative to other countries, Chainalysis said. The main reason is the absence of large-scale Ponzi schemes such as the 2019 scam involving the crypto wallet and the PlusToken exchange originating in China, he noted.

Users and customers have lost around $ 3 billion (around Rs. 22,230 crore) to $ 4 billion (around Rs. 29,650 crore) due to the PlusToken scam.

The vast majority of China’s illegal crypto fund movements are linked to scams, although this has also declined, according to the Chainalysis report.

“This is likely due to both the heightened awareness by PlusToken and the crackdown in the region,” Gurvais Grigg, director of global public sector technology at Chainalysis, said in an email to Reuters.

The report also cited the trafficking out of China of fentanyl, a very potent narcotic pain reliever prescribed for severe pain or after surgery.

Chainalysis described China as the hub of the global fentanyl trade, with many Chinese producers of the drug using the cryptocurrency to conduct transactions.

Money laundering is another notable form of crypto-based crime disproportionately practiced in China, Chainalysis said.

Most cryptocurrency-based money laundering activity involves traditional digital currency exchanges, often through over-the-counter ATMs whose businesses are built on these platforms.

Chainalysis noted that China appears to be taking action against companies and individuals facilitating this activity.

He cited Zhao Dong, founder of several Chinese OTC companies, pleading guilty in May to money laundering charges after being arrested last year.

© Thomson Reuters 2021

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