Chinese state media published an article on Tuesday (August 15), stating that the government is determined to cut off the cryptocurrency money laundering industry chain. Shanxi disclosed this week that it had cut off a criminal chain that used the sale of cigarettes and cryptocurrency to "launder money", involving a turnover of nearly 84 million yuan. Pingnan Court opened a trial on the case of Shikongyun Lai Mouhang leading a pyramid scheme, involving a sum of more than 600 million yuan.
According to the WeChat public account of the Shanxi Provincial Public Security Department, recently, the Xinghualing Branch of the Taiyuan Public Security Bureau of Shanxi Province cut off a criminal chain that provided "money laundering" services to online fraud criminal gangs by buying and selling cigarettes and using cryptocurrency transactions. 23 criminal suspects were arrested, involving 43 online fraud cases with a total transaction volume of nearly 84 million yuan.
The local police reminded that this is a new type of money laundering method for fraudulent funds, which launders illegal funds by buying and selling cigarettes and other easily convertible goods offline, and then launders them again by exchanging cryptocurrencies and transferring the funds overseas. The police reminded cigarette retailers to be vigilant when encountering people with the following behavioral characteristics.
They speak with foreign accents, dress casually and often wear masks or hats as disguises; they mostly choose cigarettes that are easy to sell and have good circulation; they usually scout the location first, and after making sure there is a large amount of stock, they return a few hours later to make the purchase; when making a purchase, they will ask the tobacco shop to provide their bank account number first, and after sending it to their superiors, they will frequently check their phones waiting for instructions; after the money is transferred to the tobacco shop from the fraudulent card by their superiors, they will quickly leave with the cigarettes.
According to the WeChat public account of "Pingnan Court Publicity", recently, the Pingnan County People's Court held a public trial in the first trial chamber of the Gangnan District People's Court of Guigang City to hear the case of the defendant Lai Mouhang and four others organizing and leading pyramid selling activities, involving a total amount of more than 600 million yuan. The public prosecutor believes that the defendant Lai Mouhang and others, in the name of mining FIL coins on the Spacetime Cloud Company platform, require participants to pay the purchase fee or rental fee of mining machines to obtain the qualification to join, and form a hierarchy in a certain order, directly or indirectly using the number of developed personnel as the basis for rebates, using high returns as bait, luring participants to continue to develop others to participate, defrauding property, disrupting the economic and social order, and the circumstances are serious. Their behavior violates the criminal law and they should be held criminally responsible for organizing and leading pyramid selling activities.
In order to speed up the trial process, the judges took a short break for one hour at noon for two consecutive days and then continued the trial. During the trial, the court conducted a court investigation around the facts alleged in the indictment. Under the auspices of the court, the prosecution and the defense fully expressed their opinions on the facts, evidence and sentencing of the case. The collegial panel also listened to the defendant's final statement. The case is currently under further trial.
According to the prosecution, in September 2019, the defendant Lai used the ipfs.cn domain name to set up the ipfs China community website and WeChat public account, vigorously promoting and exaggerating the investment prospects of distributed storage technology and the economic model of filecoin.io. Later, Lai, Liang, and Hu agreed to imitate Filecoin's economic model to create its mining model and develop the filpool.io platform of Spacetime Cloud.
After the establishment of the filpool.io platform, the gang used the website and the Space-Time Cloud platform to introduce and publicize the distributed storage technology of Space-Time Cloud and exaggerated the profit prospects of the technology. In the name of selling storage servers to mine fil coins, they promoted joint mining, cloud computing power and other packages. Participants could obtain bronze membership or above and the qualification to promote and develop members after purchasing at least 8TB of cloud computing power. Members received commission income, computing power and other encrypted assets corresponding to their membership level, and obtained value-added benefits through dynamic income, static income and other methods. The more they invested and the more downlines they developed, the more income they would get, thereby defrauding participants of their property.
On this basis, Spacetime Cloud Company developed the Spacetime Cloud platform bpool.io platform in a partner model in February 2021, and carried out pyramid selling activities using the company-partner-member model. As of May 18, 2022, the Spacetime Cloud filpoo1.io platform had a total of 57,122 members, 16 levels, and sold 7,876,518.2 USDT stablecoins with a RMB sales of 339,562,050.7 yuan. The Spacetime Cloud Bpool.io platform had 143 partners, 37,015 members, 11 levels, and sold 24,049,727 USDT coins with a RMB sales of 353,443,709.64 yuan, and 57,137 FIL coins.
Through operating the filpool.io and bpool.io platforms, Spacetime Cloud Company obtained a total of RMB 606,955,717.65 and a total of 62,155,764.8573519 cryptocurrencies.
China's official media Economic Daily reported that cryptocurrencies have the characteristics of decentralization, anonymity, global convertibility, and convenient transactions. Money laundering methods are more covert and difficult to track, opening up new channels for money laundering crimes. The multiple conversions of funds between different trading platforms and the frequent exchange of cryptocurrencies and legal currencies have increased the difficulty of collecting and retrieving evidence. Therefore, to cut off the cryptocurrency money laundering industry chain, it is necessary to seize the new characteristics of new money laundering and take multiple measures to form a joint force.
The report pointed out that regulatory authorities should further improve the regulatory mechanism, strengthen technological empowerment, and achieve full-chain tracking and full-time information backup of cryptocurrency transactions and exchanges through a combination of online monitoring and offline investigations to curb the spread of illegal and criminal activities such as money laundering. Platforms should strengthen their sense of responsibility, improve their management awareness, organizational support, control capabilities, and technical investment in anti-money laundering business, and use technical monitoring methods such as big data analysis and cloud computing to plug loopholes in a timely manner.