Hong Kong customs authorities announced Thursday (July 15) that they had disrupted a financial fraud network that utilized cryptocurrencies to handle US$155 million in illicit cash, claiming it was the first of its type.
“It is the first time in Hong Kong that a money-laundering ring involved in using cryptocurrency to wash dirty cash and conceal the source of criminal assets was broken up,” Senior Superintendent Mark Woo Wai-Kwan explained to the reporters.
Four persons, including the suspected local leader of the conspiracy, were detained and released, while the money was frozen, according to authorities.
The guys used shell businesses to create domestic bank accounts and transacted via a digital currency exchange trading platform to convert dirty cryptocurrency into real cash for customers.
Over the previous 15 months, about 60% of the money was routed via Singapore bank accounts. Officials stated the gang was exchanging privacy tokens offered by the cryptocurrency Tether.
Criminal networks and money launderers benefit from cryptocurrency since it is even more difficult to track than traditional cash transactions. However, law enforcement officials are making progress.
Uk police said on Tuesday that they would have confiscated a record £180 million (US$250 million) in cryptocurrencies accused of being used in criminal activities. China announced last month that it had detained over a thousand people to use criminal proceeds to purchase cryptocurrency.
In recent months, Beijing has been keeping a very close eye on cryptocurrencies as part of a broader governmental assault on the IT industry.
In China, cryptocurrency dealing is prohibited, and officials have lately shut down miners and ordered banks to stop processing connected payments. Prior to the shutdowns, Chinese bitcoin miners accounted for almost 80% of worldwide cryptocurrency transactions.
Hong Kong has long been a money-laundering hotspot as a business-friendly global financial hub. Experts contend that they are taking the matter seriously and that they are doing all possible to pursue illegal businesses.
The city has strengthened cryptocurrency trading regulations, mandating all companies to join with a local authority and follow anti-money trafficking and counter-terrorism funding regulations. Transparent activists, on the other hand, have long argued that Hong Kong’s weak rules make it simple to launder money and set up shell corporations.