Still ‘top ranked’ for illicit activity but crime is falling

A brand new report from Chainalysis has discovered that whereas China’s share of world felony crypto flows has been falling because the third quarter of 2019, the nation nonetheless represents a disproportionate quantity of illicit cryptocurrency exercise.

In its August 3 Cryptocurrency and China report, Chainalysis said that greater than $2.2 billion price of crypto had been despatched from Chinese language wallets to addresses related to illicit exercise between April 2019 and June 2021.

Chinese language addresses additionally obtained greater than $2 billion price of digital belongings tied to nefarious exercise corresponding to scams and darknet marketplaces. Regardless of this, the report says crime has fallen considerably:

“China’s transaction quantity with illicit addresses has fallen drastically over the time interval studied, each by way of uncooked worth and in relation to different international locations. A lot of the drop is as a result of absence of large-scale Ponzi schemes just like the 2019 PlusToken rip-off.”

Chainalysis added that, “Whereas China stays one of many top-ranked international locations for illicit transaction quantity, it used to beat all others by a large margin, suggesting that cryptocurrency-related crime within the nation has fallen.”

The authors cite “historic transaction knowledge” as suggesting that Chinese language over-the-counter (OTC) Bitcoin brokers “have performed an outsized function in facilitating cash laundering for these concerned in cryptocurrency-based crime.”

The report provides that the “overwhelming majority” of illicit Chinese language crypto flows have been related to rip-off exercise, though digital asset-based cash laundering remains to be “disproportionately carried out in China.”

Chainalysis famous that China’s central authorities carried out greater than 1,100 arrests related to digital asset-based cash laundering in June, indicating a willingness to crack down on the sector.

“It is going to be attention-grabbing to see whether or not the arrests result in a drop in flows of illicit funds to China-based cryptocurrency companies and OTC merchants.”

Chainalysis speculates that China’s growing strikes to clamp down on conventional decentralized cryptocurrencies might undermine the nation’s standing as a world crypto superpower shifting ahead.

The report attributes China’s renewed hostility towards decentralized crypto belongings to its plans for widespread adoption of the digital yuan.

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