Four persons have been arrested in Hong Kong on suspicion of laundering a total of $155 million using cryptocurrency wallets and bank accounts.
The city’s customs agency stated that this was the first time it had encountered virtual currency being used to launder dirty money.
A Syndicate Responsible for Money Laundering Recycles $155 Million in Cryptocurrency and Fiat Transactions
Hong Kong Customs reported Thursday that the criminal cell is alleged to have handled unlawful payments totalling 1.2 billion Hong Kong dollars ($155 million).
Officers arrested the accused ringleader and three other citizens of China’s special administrative area in an operation codenamed “Coin Breaker.” The money laundering syndicate began operating last year and has been operating through three sham businesses.
The entities established e-wallet accounts with an unidentified digital asset marketplace in order to trade tether (USDT). Authorities believe the scheme’s mastermind persuaded the other participants to register as CEOs of the three firms.
“Our investigation revealed that the syndicate laundered about HK$880 million ($113 million) through the cryptocurrency between February 2020 and May 2021,” said Senior Superintendent Mark Woo Wai-kwan of the Customs’ Syndicate Crimes Investigation Bureau.
The South China Morning Post reports that the official stated that the currencies used in the transactions originated from approximately 40 e-wallet accounts.
According to Superintendent Grace Tang Wai-ngan, around 150 million Hong Kong dollars’ worth of cryptocurrency was moved to more than 20 e-wallets. The remaining 730 million Hong Kong dollars were withdrawn and put in eight bank accounts controlled by the three shell corporations.
In just six months, almost 500 cryptocurrency transactions moved through the firms’ accounts, she explained. These transactions averaged 400,000 coins, or about 3.1 million Hong Kong dollars (around $400,000), with the highest transaction comprising $20 million in cryptocurrency.
Suspects Allegedly Launder $350 Million in Hong Kong Using Regular Fiat Channels
Apart from the 880 million Hong Kong dollars transacted via cryptocurrencies, officials believe that another 350 million Hong Kong dollars ($45 million) were laundered via conventional methods.
The funds were transferred to the same eight bank accounts via 100 other accounts, including business accounts associated with 18 distinct Hong Kong shell corporations.
Finally, a total of 1.08 billion Hong Kong dollars (about $140 million) was deposited in over 200 bank accounts. These accounts comprised those held by individuals and those held by money changers, investment firms, and real estate firms in Hong Kong and other jurisdictions.
Investigators determined that 60% of the monies were transferred via bank accounts in Singapore, where Hong Kong authorities enlisted the assistance of law enforcement officials in their efforts to hunt down the money.
Hong Kong Customs currently intends to strengthen its collaboration with other agencies and regulators to combat cryptocurrency-related money laundering offences.
The inquiry into the funds’ origins, initial senders, and ultimate recipients of the laundered funds continue.
The South China Morning Post reports that the four accused were released on bond. Their money laundering charges carry a maximum punishment of 14 years in jail and a fine of 5 million Hong Kong dollars (about $640,000).