What happened?
The largest virtual currency fraud and money laundering case in Taiwan concluded this week. The key suspect used the identity of 'Bitshine Technology', which had obtained the FSC's anti-money laundering declaration, to establish physical stores across Taiwan, packaging it as a legitimate operator to deceive public trust.
This case is not merely a fraud but rather a multinational money laundering group formed through cooperation between the underworld key suspect and senior executives of the offshore exchange CoinW, with fraudulent amounts reaching NT$1.27 billion and over 1,500 victims.
Crypto firm 'Bitshine' becomes a money laundering channel! Uncovering the shocking dark side of the underground crypto world.
The largest virtual currency fraud and money laundering case in Taiwan concluded this week, with the cryptocurrency firm 'Bitshine' having 45 stores, which was discovered by investigators to be a money laundering tool for a fraud group. Key suspect Shi Qiren and others used a 'legal' facade, in conjunction with the offshore exchange CoinW, to defraud over a thousand victims in just over a year, causing financial losses of up to NT$1.27 billion, with total money laundering flows exceeding NT$2.3 billion.
According to reports from ET Today, key suspect Shi Qiren comes from the underworld organization Tiandao Alliance and utilized funds from the offshore exchange CoinW to acquire 'Bitshine' company, which had already completed the anti-money laundering declaration to the FSC, with an equivalent of NT$19.2 million in USDT.
Subsequently, Shi Qiren publicly claimed 'the only authorization from the FSC', using it as legal cover, and opened more than 40 franchise stores across Taiwan.
This meticulously designed criminal model exploited the public's trust in official certification. Many victims mistakenly believed that 'Bitshine Technology' was a platform authorized by the FSC and felt assured to conduct transactions at physical stores. However, this layer of 'compliance' was, in fact, a smokescreen for large-scale money laundering.
Complex money flow breaks: Fraud groups deceive the public, making cash to crypto transfers difficult to trace.
The fraud group placed 'fake investment' ads through channels such as Facebook and dating platforms to lure victims. Once victims believed it to be true, they would be instructed to carry cash to the 'Bitshine' store to purchase USDT. Store staff not only assisted victims in completing identity verification (KYC) step by step but also directly accepted cash to exchange for virtual currency.
The prosecution's in-depth investigation revealed that after cash deposits, the money was not directly used for compliant trading but flowed into an account named 'Top 100 Company'. The responsible person, Wang, exchanged cash for US dollars, purchased USDT, and ultimately transferred funds to CoinW's wallet, through layers of transfers to anonymous wallets, creating breaks in the currency flow that made it difficult for the police to trace. In just over a year, the amount laundered through this model reached NT$2.3 billion.
Deep involvement of CoinW executives: From the promise of 'buying a license' to being indicted in the case.
What is most shocking about this case is the deep connection between the criminal organization and the offshore exchange CoinW. According to reports from ET Today, among the 14 defendants indicted by the prosecution, many were current or former executives and employees of CoinW, with extremely meticulous division of labor, further explaining that Bitshine and CoinW are actually 'the same company'.
Key suspect: Shi Qiren, who led the acquisition of Bitshine and engaged in franchise negotiations and market management, bringing in resources from fraud groups.
CoinW Asia-Pacific Business Director: Yang, responsible for business development and coordination with fraud groups, managing 'market' customer sources.
Money flow operator: Wang, responsible for establishing a top 100 company, controlling bank accounts and 'deposit machine' systems, specifically in charge of cash transactions, purchasing USDT, and distributing it to various stores.
CoinW Asia-Pacific Marketing Director: Shi Qiren's wife, responsible for organizing various marketing activities and exhibitions, assisting CoinW in promoting in Taiwan.
CoinW Business Development: Huang, Xu, and Li, responsible for recruiting KOLs and agents, profiting from transaction volume commissions.
Product Manager: Chen A, handling website maintenance and user issues.
Social Media Editor: Chen B, responsible for managing Facebook, IG, and LINE groups, promoting CoinW and Bitshine.
As early as December 2023, WEB3+ had conducted an exclusive interview regarding CoinW's plan to acquire Taiwanese operators that had completed their anti-money laundering declarations through 'buying licenses' to accelerate their 'localization' rumors.
In 2023, Taiwan mainly regulates VASP operators under the Anti-Money Laundering Act. VASP operators can engage in related businesses as long as they complete the 'Anti-Money Laundering Compliance Declaration' to the FSC and comply with relevant regulations.
Nina, who served as CoinW's Taiwan Brand Director at the time, stated in an interview with WEB3+ that the communication process with the FSC 'did not encounter any special challenges or obstacles', and emphasized that the FSC hoped for self-regulation from operators, so the team complied with regulations and acquired a compliant exchange as a legal entity. She repeatedly emphasized that CoinW was 'fully compliant' and claimed that the team had complied with the FSC's anti-money laundering requirements and regulations, hoping to 'make users feel more at ease'.
However, regarding this phenomenon of 'buying a license', the Financial Supervisory Commission (FSC) responded at the time that if operators want to change important information such as responsible persons or substantive beneficiaries, they must provide complete information to the FSC for review before making changes.
Legal defense and regulatory loopholes: Key suspect denies.
In response to the prosecution's accusations, key suspect Shi Qiren completely denied, claiming that he was only acquiring the company for operation and franchising, and argued that the funds for purchasing currency were borrowed from CoinW without signing a promissory note. However, Yang, Wang, and others admitted that Bitshine and CoinW overlap significantly and acknowledged that 'backend customers' came from fraud groups. The prosecution criticized Shi Qiren's poor attitude after the crime and requested the court to sentence him to 25 years in prison.
CoinW Asia-Pacific Business Marketing Director Yang Jiweng
This case has once again raised questions about the FSC's regulation. Although the FSC has already included virtual asset operators in the anti-money laundering regulations and announced a compliance list, 'Bitshine Technology' was still exploited by the criminal group while on the list.
However, in 2023, Taiwan's regulation of VASP is still in a transitional phase, focusing on strengthening anti-money laundering measures in the virtual asset market through the issuance of guidelines and encouraging industry self-regulation, while paving the way for subsequent specific laws and a 'registration system'. With the official launch of the registration system, the number of compliant operators on the list has decreased from 25 to 8. Whether the future specific law can effectively regulate crypto operators remains to be seen over time.
The prosecution ultimately indicted 14 people for aggravated fraud, money laundering prevention law, and organized crime prevention regulations, and seized assets worth over NT$110 million, including virtual currencies, cash, and Ferraris. This is the largest virtual currency fraud case in Taiwan's history, which not only sounded the alarm for all virtual asset trading but also highlighted the urgency of sound regulation and preventing virtual currency money laundering.
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