In the past two months, over 35 OTC money laundering cases have been prosecuted, involving an amount of approximately 180 million yuan | Data on Crypto

This article is an original piece by Chain Catcher, author: Echo, editor: Gong Quanyu.

In the second half of last year, the "frozen card wave" swept through the cryptocurrency circle, and due to the gradual increase in regulatory intensity, this frozen card wave was more severe than previous instances, with most OTC trading users experiencing frozen cards.

Recently, Chain Catcher discovered that in response to the frozen card wave in the second half of last year, a large number of judicial documents related to OTC cases involving cryptocurrency exchanges have appeared on the China Judgments Online. According to Chain Catcher statistics, since March, there have been over 35 OTC-related cases, with the amount involved approximately 180 million RMB, the vast majority of which occurred on Huobi exchange.

Specifically, most of these cases involve the crime of assisting information network criminal activities, that is, knowing that others are using information networks to commit crimes, still providing payment settlement assistance for their criminal proceeds, converting fiat currency into USDT through the OTC platform of cryptocurrency exchanges.

In addition, some defendants were involved in the case because they lent their personal ID cards, bank cards, mobile phone cards, U-shields, etc., to money laundering parties, typically earning a service fee of 30-50 RMB for every 10,000 RMB transferred. Although there was no actual involvement in money laundering activities, they were still criminally prosecuted for facilitating payment settlement.

According to the criminal law, once the "crime of assisting information network criminal activities" is confirmed, the maximum penalty can be three years of imprisonment. From the judgment results on the document website, such cases generally result in sentences of six months to one year for the defendants, while those involving larger amounts or more serious circumstances may receive longer sentences, adjusted based on the actual situation; confiscation of illegal gains; and fines based on the nature of the crime.

In the OTC series of cases, the case with the highest amount involved had a fund flow exceeding 50 million RMB. It is understood that this case occurred in June last year, where the defendant engaged in digital asset trading services on the "Huobi" website. In August, the defendant learned through the internet that someone wanted to purchase USDT on the "Huobi" website using an abnormal trading method of offline payment and online withdrawal.

To seek profit, the defendant, knowing that this trading method was abnormal and that the funds provided by the buyer might be illegal, still provided payment settlement assistance for the buyer's online crime, either alone or in collusion with others, during which a total of 50,790,580.15 RMB of illegal funds was received from the buyer, with illegal profits of approximately 66,813.78 RMB. According to the document website, the court ultimately sentenced the defendant to one year and two months in prison, confiscated illegal gains, and imposed a fine of 10,000 RMB.

Last week, information related to a court hearing involving Zhao Dong, suspected to be the founder of RenrenBit, also appeared on the court's website. The information indicated that Zhao Dong and 12 others were suspected of illegal business operations and assisting information network criminal activities, with the case set to be heard on May 12, 2021, at the People's Court of Xihu District, Hangzhou.

Recently, the phenomenon of frozen cards in cryptocurrency OTC trading has significantly decreased, reflecting the police's crackdown on OTC money laundering cases and the significant effectiveness of reforms in the OTC access mechanism by exchanges.