A group in China has been convicted and fined for engaging in money laundering using the country’s central bank digital currency, the yuan, as reported by local media.
Three individuals in Yuecheng District, Shaoxing City, Zhejiang Province were sentenced to prison terms ranging from seven to 16 months for their involvement in money laundering. The trial date was not disclosed.
The group, known only by their last names, managed to launder 200,000 Chinese yuan ($27,580) in digital form over a span of four days in mid-September in Shaoxing. One additional person was arrested but their fate remains unknown, according to Mpaypass, a Chinese business website.
Yuan, who had traveled to Shaoxing in search of work, discovered an opportunity to earn a 0.8% commission by converting digital yuan into cash with local merchants. After conducting several transactions alone, he enlisted the help of his girlfriend, Zhang, and their friend Kuo.
The gang offered a commission of 1% to 1.5% to merchants in various cities to exchange digital yuan for cash. They communicated with their “superior” using overseas chat tools. Zhang and Kuo received a 0.5% commission for their participation.
Despite the limited acceptance of digital yuan by stores, abnormal flows of the currency among merchants caught the attention of law enforcement, leading to the swift apprehension of the gang members.
Officials from the People’s Bank of China have highlighted the “controllable anonymity” feature of the digital yuan, emphasizing its importance in preventing criminal activities. While instances of digital yuan-related crime are uncommon, a case in Shanghai in May 2023 involved eight individuals who were sentenced to prison terms ranging from four to 54 months, along with fines, for laundering $1.379 million, some of which was obtained through telecommunications network fraud.
The ability to open digital yuan accounts using only phone numbers played a crucial role in the Shanghai case, which was uncovered after bank employees raised concerns.