China Cracks Down on $20M Bitcoin Laundering Scheme Linked to Viral TikTok-Style App

Chinese authorities just pulled back the curtain on a crypto crime wave hiding in plain sight—right under the noses of 1 billion smartphone users.

How it worked: A popular short-video app (think TikTok’s rebellious cousin) allegedly served as the front for a slick $20 million Bitcoin laundering operation. Not exactly the 'financial innovation' Web3 evangelists promised.

The takedown: Police across three provinces coordinated raids, seizing cold wallets and arresting suspects who thought pseudonymity made them untouchable. Joke’s on them—blockchain leaves fingerprints.

Why it matters: This isn’t your grandma’s money laundering. Criminals are weaponizing the very apps that dominate Gen Z’s screen time, turning viral trends into compliance nightmares.

The kicker? While regulators play whack-a-mole with crypto schemes, traditional banks quietly process trillions in dirty fiat annually. But sure, Bitcoin’s the problem.

Kuaishou Employees Imprisoned for $20 Million Bitcoin Scheme

The Haidian District People’s Procuratorate in Beijing reported that company insiders embezzled nearly 140 million yuan (around $20 million).

Reportedly, they used Bitcoin to conceal and move the funds through a sophisticated network of crypto exchanges and mixers.

The case revealed how the group funneled the stolen funds through eight overseas cryptocurrency exchanges, leveraging coin mixing services to obfuscate the transaction trail.

Despite their efforts, investigators tracked down the flows and ultimately recovered 92 BTC, worth approximately 89 million yuan ($11.7 million), which was returned to the company. A prosecutor from the Haidian Procuratorate described the case as emblematic of new trends in digital corruption.

“This case highlights three notable features of modern digital-era corruption: Small officials with big corruption, money laundering with VIRTUAL currency, and weak corporate risk management awareness,” local media reported, citing prosecutor Li Tao.

Feng, the main perpetrator, and seven co-conspirators were convicted of occupational embezzlement. Their sentences ranged from three to fourteen years in prison, along with financial penalties.

The verdict, delivered by the Haidian District People’s Court, emphasizes China’s growing capacity to trace digital assets even through layers of anonymizing tools.

This case is significant beyond the size of the funds, reflecting a rising trend where commercial corruption is intertwined with emerging technologies like crypto. This allows perpetrators to conduct high-tech laundering beyond traditional regulatory reach.

Recently, a Beijing court sentenced former financial official Hao Gang to 11 years in prison for bribery and Bitcoin-related money laundering.

The Haidian Procuratorate recently released a WHITE paper on commercial corruption, documenting 1,253 related cases between 2020 and 2024.

Authorities highlighted how many schemes are now coordinated with external actors and depend heavily on digital tools to evade scrutiny.

This case signals the need for tech companies and crypto platforms to strengthen monitoring systems amid rising enforcement efforts.

Meanwhile, China’s stance on crypto remains contentious. The National Development and Reform Commission of China (NDRC) categorized the digital assets market as an undesirable industry. Against this backdrop, provinces shut down mining operations.

Similarly, the Chinese government declared all crypto-related transactions illegal, solidifying the ban and prohibiting overseas exchanges from serving Chinese citizens. BeInCrypto reported aChinese court ruling that crypto futures trading constitutes gambling, convicting BKEX employees for “opening a casino.”

Notwithstanding, the country possesses a proven capacity to adjust to geopolitical shifts to sustain its economic dominance. Two such endeavors include a recent $138 billion stimulus and reverse repo rate adjustments.