China has intensified its crackdown on cryptocurrency-related financial crimes, with a former technology executive receiving a prison sentence of more than 14 years for embezzling $19.5 million using digital assets. The individual, identified by his surname Feng, leveraged overseas crypto platforms and coin mixing services to obscure the origins of the embezzled funds before converting them back to yuan for transfers in mainland China [1]. This case, investigated by the Beijing Haidian People’s Procuratorate, highlights how criminals exploit the pseudonymous features of cryptocurrencies to evade detection [1].
The prosecution demonstrated a detailed reconstruction of the embezzlement and laundering process, which involved eight overseas virtual currency platforms. Feng’s actions included converting stolen funds into bitcoin and other digital assets, then using mixing services to break the transaction trail [1]. As part of the court’s ruling, Feng is required to surrender 90 hidden bitcoins, currently valued at over $11 million, marking one of the largest individual crypto-related confiscations in recent years [1].
This case underscores the persistent threat of money laundering via cryptocurrencies, even amid China’s strict domestic regulations. The country has banned trading, mining, and financial institution participation in cryptocurrency activities since 2021. However, authorities have increasingly turned to Hong Kong, where virtual asset trading remains legal and regulated, to liquidate seized digital assets. In this instance, Beijing police announced a partnership with the Beijing Equity Exchange to facilitate the legal conversion of confiscated cryptocurrencies through licensed Hong Kong exchanges [1].
The scale of crypto seizures is growing, contributing to an expanding government portfolio of digital assets. For example, in 2020, authorities in Yancheng, Jiangsu province, confiscated 195,000 bitcoin from a Ponzi scheme, which would be worth approximately $23.4 billion at current market prices. These operations reveal not only the magnitude of cryptocurrency-related crime but also the government’s capacity to seize and manage digital assets through structured legal frameworks [1].
The Haidian case is emblematic of the sophisticated methods used by criminals to evade detection, including the use of mixing services and multi-platform transfers. It also highlights the government’s evolving strategy—combining stringent domestic enforcement with institutionalized international liquidation mechanisms. This dual approach allows China to maintain its regulatory stance while ensuring that criminal assets can still be recovered and converted into traditional currency [1].
The continued rise in high-profile crypto-related arrests suggests that regulators are improving their ability to trace and act on digital financial crimes. The use of partnerships like the one with the Beijing Equity Exchange indicates a move toward more systematic and transparent management of seized digital assets, aligning with broader efforts to establish a legal infrastructure for handling cryptocurrencies in a controlled manner [1].
Source: [1] China Cracks Down on $19.5M Crypto Money Laundering Ring Using Mixing Services (https://coinedition.com/china-cracks-down-on-19-5m-crypto-money-laundering-ring-using-mixing-services/)
