Quick Take:

• Chinese authorities arrest six suspects involved in using cryptocurrency for illegal foreign exchange operations between the Chinese yuan and the South Korean won.
• Transactions amounted to 2.14 billion yuan ($295.8 million).

China has dismantled an underground bank that illicitly employed cryptocurrency for currency exchange transactions between the Chinese yuan and the South Korean won, totaling at least 2.14 billion yuan ($295.8 million).

According to a report from local police in Northeast China’s Jilin province, six suspects were apprehended for their alleged roles in facilitating the operations in both China and South Korea.

The police revealed that the suspects leveraged cryptocurrency’s features, such as transaction anonymity and decentralization, to carry out illegal foreign currency exchange activities.

The criminal group utilized domestic accounts to receive and transfer funds, conducting over-the-counter cryptocurrency transactions. They purportedly aided various entities, including South Korean purchasing agents, cross-border e-commerce platforms, and import/export trade firms, in exchanging currencies between the Chinese yuan and the South Korean won.

China’s stringent capital control policies have prompted individuals to turn to cryptocurrency as a means to bypass regulatory restrictions.