China Cracks Down: $20M Bitcoin Laundering Scheme Uncovered in Major Crypto Enforcement

Chinese authorities just dropped the hammer on a $20 million Bitcoin laundering operation—proving even crypto's shadow economy isn't bulletproof.

The takedown: A textbook case of blockchain forensics meets old-school police work. Beijing's cyber cops traced dirty BTC through mixers, DeFi hops, and OTC desks before pulling the plug.

Why it matters: While regulators globally still debate frameworks, China's showing how to hunt crypto crime at scale. The twist? Half the laundered coins allegedly funded—wait for it—real estate speculation. Because nothing launders money like property and digital gold.

The bottom line: Another win for blockchain transparency. And another reminder that when governments really want to follow the money, pseudonymity crumbles faster than a shitcoin's liquidity pool.

How the Bitcoin scam unfolded

According to the report, the employee, identified by local media as Feng, was responsible for approving new participants and formulating incentive policies.

During the rollout of a new bonus program, Feng created policy gaps and leaked internal data to outside collaborators. These partners then submitted falsified applications that appeared to meet eligibility requirements, allowing them to fraudulently claim reward funds.

The conspirators set up shell companies to receive the stolen funds and conceal the theft. They then transferred the money through eight offshore crypto exchanges, converting it into bitcoin in multiple batches.

The group also used crypto mixing services to obscure the origin and destination of the assets, making the flow harder to trace.

After converting the Bitcoin into Chinese yuan through underground channels, the funds ended up in accounts controlled by Feng and the accomplices.

Despite this significant laundering process, law enforcement agencies were eventually able to track and seize more than 90 BTC tied to the scheme.

The authorities also prosecuted the individuals involved, handing out prison sentences ranging from six months to 14 years for financial misconduct and embezzlement.

This case highlights China’s firm approach toward cryptocurrency-related crimes. Although the country banned crypto trading in 2017 and declared all digital asset transactions illegal in 2021, authorities remain active in policing the space.

Notably, China still holds a significant amount of Bitcoin, over 190,000 BTC, seized during past investigations into illicit crypto activities