“There were four transactions, the bank card was frozen three times, and Alipay was selected for the last time. As a result, because the system judged that the transaction was abnormal, Alipay was frozen again.”
I bought it but didn’t dare to sell it, and it was difficult to make a profit to become a real wealth. When the price of Bitcoin repeatedly hit record highs, similar encounters were like a cloud over every speculator.
Since its inception, despite frequent price fluctuations, Bitcoin has become a well-known alternative asset, which is known and traded by more and more people, and the price has been rising. On the other side of the coin, the semi-anonymity of Bitcoin has become a hotbed for some criminals to hide their identities, transfer funds, and evade foreign exchange controls. Especially since 2017, since many countries including China cut off the way to buy digital assets such as Bitcoin with legal currency, a variety of stable currencies such as USDT and USDC that are anchored to the US dollar have become the basic tools of the currency circle. The above actions provide a more convenient and risk-free channel.
Since 2020, with the joint efforts of the Ministry of Public Security, the Central Bank and other departments to crack down on the governance of cross-border gambling capital chains, money laundering and fund transfers with the help of virtual assets such as Bitcoin and stablecoins have been closely watched by supervision. Once involved in the transmission chain of certain illegal funds, such as selling virtual currency at a suspected OTC merchant, or being judged as an abnormal transaction by the bank, the bank card freeze will be triggered, and the time will range from three days to two years. Not waiting. What’s more, they will be ordered by the public security department to cooperate with the investigation and explain the ins and outs of the funds.
Under the tide of frozen cards, despite the steadily rising currency prices at the end of the year, there were rumors in the circle, and everyone at OTC merchants was at risk. A veteran player complained to reporters that he boldly bought from the low Bitcoin price in March, and then bet some DeFi concept assets, earning more than 10 million yuan this year, but his friends have generally been frozen. He didn’t dare to try to cash out easily, so he had to switch to stable coins and put them on the exchange.
“In the past few years, the people in the currency circle were not so mixed, so KYC is easier to do, but in the past two years, there have been a lot of fraud, gambling and even drug-related funds. I wanted to use virtual currency to wash out through various disguise, and I was a little careless. It will be recruited.” An OTC merchant specializing in over-the-counter transactions of virtual assets described to reporters that although this part of the funds accounted for a very small proportion, once involved, the upstream and downstream of the entire capital distribution chain will be implicated, resulting in Freezing cards have even more serious consequences.
The reporter learned from close supervisors that the central bank and foreign exchange bureaus have long established comprehensive supervision methods for the aforementioned risks, and special departments are directly responsible. “For example, on the day when the white paper is released for the similar stable currency Libra, we will ask them to conduct research on the risks involved. Explained.” In the trend of increasing supervision of anti-money laundering and cracking down on cross-border gambling capital flows, the crackdown on gray behaviors in the currency circle will only be more severe in the future.
This also means that the freezing card tide may just be the beginning. “Compliance is the only way out in the future.” The co-founder of a leading exchange told reporters that the exchange needs to do a good job at the source and conduct more stringent reviews of OTC merchant access qualifications.
Stablecoin becomes an excellent carrier for money laundering
Since its inception in 2009, Bitcoin has quickly become popular around the world in recent years due to its limited number, decentralization, and semi-anonymity, attracting a lot of attention.
But these characteristics have also led to Bitcoin being used by a few criminals in various gray areas. Using Bitcoin to bypass the central bank’s foreign exchange control and transfer capital out of the country has also become one of its uses.
An extreme case is that during the unusual volatility of the A-share stock market in 2015, Ishton, a trading company that made more than 2 billion yuan in profits through high-frequency trading, sought to transfer huge amounts of funds through Bitcoin.
The reporter was informed that Ishidun found the Bitcoin China trading platform at that time, but a relevant person in Bitcoin China revealed that Ishdun failed to pass the corresponding real-name verification and the transaction amount was huge. This behavior caused the platform to alert and refused. Ishton trade request.
However, the large fluctuations in the price of Bitcoin and the slow transaction speed cannot provide sufficient safety mats for money laundering. With the development of the virtual asset market, the stable currency that connects the legal currency and virtual assets, because it provides value-preserving properties in the volatile virtual asset market, has become the base currency of the currency circle and is also regarded by criminals as a higher value. An efficient and safer money laundering carrier.
Among them, USDT (Chinese name “TEDA Coin”) is the stable currency with the highest market share, and its current total market value has exceeded 19 billion US dollars. The stablecoin was launched by Tether. 1USDT is equivalent to 1 U.S. dollar. Users can use USDT and USD for 1:1 exchange. At the same time, Tether claims to comply with the 1:1 reserve guarantee, that is, for every USDT token issued, its bank The account will have 1 USD fund guarantee.
Domestic regulation has long been alert to the risks brought by stablecoins. Mu Changchun, director of the Central Bank’s Digital Currency Research Institute, has repeatedly stated that global stablecoins pose many risks to public policies and supervision, such as legal certainty, governance, anti-money laundering, anti-terrorist financing, anti-weapons of mass destruction supervision, and payment system security. , Market stability, personal privacy and information protection, consumer and investor protection, tax compliance and other challenges, and it is very likely that the underground economic channel will be completely opened and become a tool for illegal transactions.
The Financial Action Task Force (FATF) report of the international anti-money laundering authority also pointed out that stablecoins will cause changes in the virtual asset ecosystem and cause greater risks of money laundering and terrorist financing.
“Mao and Gou are here”
The risk of money laundering caused by virtual assets, especially stablecoins, is the fundamental reason why the entire currency circle has fallen into a wave of freezing cards.
A virtual asset wallet founder told reporters, “The biggest problem in the past two years is that cats and dogs have entered the currency circle and can’t touch these people.” Another merchant who has been engaged in OTC for many years complained. Customer review is at most to prevent telecommunications fraudulent funds, but because of the rise of overseas gambling and killing pigs, these “cats and dogs” are behind gambling or even drug-related money. They want to achieve cross-border transfer of funds or money laundering through OTC transactions. the goal of.
“If you are not careful, there will be a 37-day package waiting for you, and you may even be sentenced.” The merchant described that a colleague was used as an intermediary for gambling funds because of incomplete KYC enforcement, and he cooperated with the public security department to investigate 37 days. He was released without knowing it, and the bank cards of currency speculators trading with him were also frozen.
At a conference held in September, Liao Jinrong, director of the International Cooperation Bureau of the Ministry of Public Security, introduced the fight against cross-border gambling crimes. He revealed that according to preliminary statistics, the outflow of gambling funds from China exceeds one trillion yuan each year. In the context of increasing downward pressure on the economy, the economic and financial security risks are continuously aggravated. Judging from the form of crime, some gambling gangs use virtual currency to collect and transfer gambling funds, and even use online gambling as a ground of investment in parts of Myanmar. This type of new channel cannot be frozen, and it is difficult to trace its anonymity, which brings great challenges to the crackdown.
The Central Bank disclosed in October that the Huizhou City Center Branch of the People’s Bank of China assisted the local police in uncovering a cross-border online gambling case using the virtual currency TEDA (USDT). 77 criminal suspects were arrested and 3 gambling websites were destroyed, involving nearly 120 million yuan. This case not only circulates in bank accounts, but also involves virtual currency, and through multiple whitewashing, the direction of funds is extremely hidden.
“We are now trying pure transactions. Simply put, every money and every coin we handle has to be reviewed separately, but this is just an ideal. If every transaction is reviewed, 99% of users have basically It is blocked.” The founder of the aforementioned virtual asset wallet said that under the trend of tightening supervision, OTC merchants are becoming more and more difficult to do.
In order to prevent bank cards from being frozen, money speculators have summed up a lot of experience internally. For example, do not use salary cards or common cards for trading. If the mortgage and car loans are frozen, they will be cut off, and there will be problems with credit investigation. Do not use large Bank cards, because of stricter risk control.
A similar experience is that the cash flow needs to be spent overnight. A higher-level approach is to buy and sell through different bank cards, and the funds from the currency sales are immediately bought into wealth management products, and then withdrawn.
The crackdown will only be stricter
But no matter how merchants and players circumvent, subject to the gray identity of virtual currency, and the insufficiency of connection with illegal funds, the freezing card tide may be just the beginning.
Supervisors close to the central bank told reporters that the current supervisory thinking is still “all in accordance with the notice of the seven ministries and commissions.” In 2017, the seven ministries and commissions including the Central Bank announced that the exchange of “virtual currencies” between each other is strictly prohibited, and they are not allowed to buy or sell tokens or “virtual currencies” as the central counterparty, or provide pricing or “virtual currencies”. Information intermediary and other services.
The crackdown on cross-border gambling capital chains has also been under high pressure. Fan Yifei, deputy governor of the central bank, recently pointed out that cutting off the cross-border gambling capital chain is an important task for resolutely winning the battle to prevent and resolve major financial risks. It is necessary to be highly vigilant and accurately grasp the difficulties and challenges in cracking down on cross-border gambling financial supervision work, continue to strengthen investigation and research, find out the methods of cross-border gambling capital circulation, accurately grasp the actual situation of the gambling capital chain, and timely and effectively adjust prevention Control strategies and tactics are targeted and effective.
Fan Yifei emphasized that it is necessary to strengthen overall coordination, do a good job in information sharing, and fully mobilize the power of grassroots branches. At the same time, strengthen the main responsibility, and continue to take accountability of the main responsibility of licensed payment services in accordance with the principles of “who opens an account (card) who is responsible”, “who users (merchant) is responsible”, and “who cooperates with customers who are responsible”. In addition, targeted efforts were made to strengthen risk prevention and control work such as customer identification, large-value and suspicious transaction reports, and account cash withdrawal authentication.
The relevant person in charge of the Foreign Exchange Bureau also stated that the current situation in cracking down on cross-border gambling is still very severe and complicated. It will maintain a high-pressure crackdown on the illegal transfer of cross-border gambling funds, and cooperate with the public security organs to continue to severely crack down on underground banks and resolutely cut down. The illegal exchange and circulation channels of gambling funds shall be cut off, and banks and payment institutions that provide payment and settlement services for illegal and illegal cross-border gambling funds shall be investigated and dealt with in accordance with the law.
Under the high pressure situation, the shadow over the speculators is hard to disperse. An insider predicted that players involved in currency speculation may experience their first frozen card in their lives in the past one or two years.
