According to a recent report, the Chinese government has acknowledged that cryptocurrency might be used to facilitate drug trafficking.
Chinese news source Nncc626 reported on June 23 that the authorities had uncovered a new phenomenon in the movement of drug funds, a shift from online bank transactions to cryptocurrency.
Drug traffickers are also using virtual money to make illegal trading easier, according to China, one of the least crypto-friendly nations in the world. According to officials, drug traffickers are increasingly turning to the internet as a way of evading the law.
China’s crackdown on cryptocurrency
The Chinese government’s drive to outlaw cryptocurrencies was likely sparked by the use of cryptocurrency to facilitate drug trafficking. On the subject of cryptocurrency mining and trading, the state of 2021 forbade these operations since the industry is considered a danger to financial stability.
Due to the anonymity of cryptocurrencies, the majority of criminals are enticed to use them. It was shown that between April 2019 and June 2021, Chinese bitcoin addresses sent over $2.2 billion in cryptocurrencies to accounts associated with illegal operations, despite the heightened government crackdown.
Through decentralized exchanges, crypto is traded for fiat currency
Most of the time, decentralized exchanges are used to convert cryptocurrency holdings into fiat currency. Binance, the largest cryptocurrency exchange in the world, was reportedly used to launder $2.3 billion in criminal funds.
Before the crackdown, Chinese money launderers were allegedly used by drug traffickers from other countries to buy drug production ingredients.
According to the Finbold report, drug traffickers are increasingly using new cryptocurrencies. Unlike Bitcoin and the privacy-focused token Monero, Dogecoin has emerged as a meme currency alternative.