A group in China has been sentenced by a court for money laundering using the central bank digital currency, according to local reports.
The People’s Procuratorate of Yuecheng District in Shaoxing City, Zhejiang Province handed down prison sentences ranging from seven to 16 months to three individuals involved in money laundering. The specific date of the trial was not disclosed.
The individuals were only identified by their last names. They managed to launder 200,000 Chinese yuan ($27,580) in digital form over a span of four days in mid-September in Shaoxing, as reported by the Chinese business website Mpaypass. A fourth person was also arrested, but their outcome was not specified.
Yuan, who had traveled to Shaoxing in search of work, stumbled upon an advertisement in his hotel offering a 0.8% commission to individuals who could convert digital yuan with local merchants. Initially operating alone, Yuan eventually enlisted the help of his girlfriend, Zhang, and their friend Kuo.
The gang enticed merchants in various locations including Shaoxing, Jinhua, Hangzhou, and Jiaxing with a commission of 1%–1.5% to convert digital yuan into cash. They utilized “overseas niche chat tools” to communicate with their superior. Zhang and Kuo received a 0.5% commission for their involvement.
Although “not many stores” accepted digital yuan, the gang’s operations caught the attention of public security organizations due to abnormal digital yuan movements among merchants, leading to the apprehension of the group members.
According to current and former People’s Bank of China officials, the digital yuan offers “controllable anonymity” for crime prevention, as highlighted in the press report.
While instances of digital yuan-related crimes are uncommon, a previous case was reported in January by the website Cnstock, describing a similar incident in Shanghai in May 2023. This was the first of its kind in the city, involving the conviction of eight individuals, including merchants, who were sentenced to prison terms ranging from four to 54 months, along with fines, for laundering a total of $1.379 million, some of which was obtained through telecommunications network fraud.
The scheme in Shanghai relied on the ability to open digital yuan accounts using only phone numbers, which was eventually uncovered after suspicious activities were reported by bank staff.