Chinese authorities have detained 16 individuals accused of laundering proceeds from telephone scams through bank accounts, payment channels, and cryptocurrency-linked transfers, according to local police.

Police Target Crypto Laundering Network

The suspects were allegedly connected to a money laundering network that processed funds derived from telephone fraud. According to police, the group recruited individuals willing to provide bank cards and payment accounts for moving suspicious funds through various financial channels.

Authorities described the network as operating through close personal relationships, a structure that facilitated the recruitment of account holders and the management of fund flows between different payment systems.

Investigators have not disclosed the total monetary value involved in the case. They have also not confirmed the specific digital assets, wallet addresses, or blockchain networks allegedly used by the suspects.

Local reports noted that similar laundering schemes in China frequently employ rented bank accounts before funds are transferred through splitting platforms. In some cases, funds are subsequently converted into USDT on networks such as TRON, though authorities have not confirmed this specific path in the current investigation.

The detentions align with a broader enforcement pattern that accelerated after China enacted its Anti-Telecom and Online Fraud Law in December 2022, which criminalized the sale and rental of bank cards and payment accounts for fraudulent purposes and expanded authorities' tools for pursuing facilitators.

China Strengthens Crypto AML Enforcement

China has classified cryptocurrency exchange and intermediation services as illegal financial activities since 2021. While the policy did not eliminate criminal use of digital assets, it shifted some activity toward informal networks and offshore platforms.

On August 20, 2024, China clarified its criminal framework through a joint judicial interpretation by the Supreme People's Court and the Supreme People's Procuratorate, which listed virtual asset transactions among methods that can be used to transfer or conceal criminal proceeds.

The updated framework provides prosecutors with a clearer basis to pursue cases in which fraud proceeds are moved through digital assets, linking cryptocurrency transfers more directly to money laundering investigations.

China's revised anti-money laundering law took effect on January 1, 2025, strengthening monitoring obligations and cooperation among authorities responsible for financial crime, online fraud, and payment abuse. The revision also brought virtual asset service providers more explicitly within the scope of regulated obligated institutions, even though such operations remain banned domestically.

Telephone and online fraud operations frequently depend on recruited account holders. Police have also targeted individuals who sell or rent bank cards, payment accounts, and personal identification details for use in suspicious transfers.

Global Crackdown Expands Across Crypto Fraud Cases

The detentions in China come as authorities in other countries pursue similar crypto-linked laundering and fraud networks.

In the United States, prosecutors recently charged two New York residents in connection with an alleged investment fraud laundering scheme. According to the indictment, Zhuoying Chen and Haojie Zhang managed a network that opened 140 bank accounts under approximately 45 shell companies. Prosecutors alleged the network laundered at least $43 million from cyber investment fraud scams.

Assistant Attorney General A. Tysen Duva stated: "Dismantling Chinese money laundering networks that support investment fraud schemes is critical to protecting Americans."

U.S. Attorney Joseph Nocella Jr. said the defendants allegedly moved more than $40 million in victim funds to bank accounts in China.

In South Korea, police recently arrested three suspects in an XRP staking fraud case. Authorities reported that 71 victims sent 3.4 million XRP to a fake FXRP platform that promised high fixed returns.

The parallel enforcement actions across jurisdictions reflect growing coordination under frameworks such as the Financial Action Task Force's updated guidance on virtual asset service providers, which has pressured member countries to tighten oversight of crypto-to-fiat off-ramping channels commonly exploited by laundering networks.