Chinese turn to crypto-focused money laundering amid economic crisis

YEREVAN (CoinChapter.com) – The People’s Republic of China, the second-largest economy in the world, will face stunted economic growth this year, said the World Bank in a biannual report released on Sep 27.

But while the housing crisis rages on and the GDP declines, the government busted a $5.6 billion money laundering ring operating on the crypto market.

Crypto money laundering scheme

As a part of the “Hundred-day Action” campaign, the police arrested 93 suspects across the country and busted over ten physical sites.

Moreover, the government confiscated over a hundred electronic devices and froze about 300 million yuan in the case.

According to the police, the criminal group received the ‘dirty’ money mainly from gambling and telecom scams. The culprits would then redirect the funds to crypto exchanges, buy digital assets, and swap them for US dollars.

Also read: Bitcoin bear market 2022 to continue, previous S&P 500 crashes testify.

Notably, China banned cryptocurrency trading in 2021. But, despite the prohibition, the country ranks #10 in a 2022 crypto adoption review.

Chinese economy slows down

According to the World Bank biannual report, China lags behind its Asia-Pacific neighbors for the first time since 1990. The growth halt is mainly due to Covid-zero policies and the housing market crisis.

The report also stated that the annual growth outlook for East Asia and the Pacific region had been downgraded from 5% to 3.2%. The institution pinned most of the economic woes on China, which constitutes 86% of the region’s economic output.

Notably, China’s Gross Domestic Product (GDP) growth rate stood at 5.9% in 2019. However, GDP will only grow 2.8% in 2022 and 4.5% in 2023, says World Bank. Meanwhile, the other 23 countries in the region are expected to churn out a GDP growth of 5.3% on average.

Meanwhile, the housing crisis in the country wreaks havoc on the economy. In August, new home prices in 70 Chinese cities fell by a worse-than-expected 1.3% year-over-year, and nearly a third of all property loans are now classed as bad debts.

Manuela Ferro, the vice-president of World Bank East Asia and Pacific, addressed the issue, asserting that long-term development largely depends on domestic policy.

As they prepare for slowing global growth, countries should address domestic policy distortions that are an impediment to longer term development

said the expert.

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