Beijing Court Sentences Tech Executive to 14 Years for $19.5M Crypto Laundering Scheme

A Beijing court has sentenced Feng, a technology executive, to 14 years in prison for orchestrating a $19.5 million cryptocurrency money laundering scheme between 2023 and 2024. The case involved the use of shell companies and eight overseas cryptocurrency exchanges to launder stolen funds from a major short video platform. Feng was found guilty of collaborating with co-conspirators Tang and Yang, who exploited loopholes in the company’s incentive system to fraudulently claim 140 million yuan (approximately $19.5 million) in rewards [1].

The investigation revealed that Feng leveraged his position overseeing service provider approvals and reward policies to create deliberate vulnerabilities in the platform’s subsidy system. These loopholes allowed external partners to submit fraudulent applications that met the criteria for legitimate reward recipients. The scheme escalated as the group instructed accomplices to register shell companies to receive the stolen incentives before funneling the money into accounts controlled by the criminal network [1].

To further obscure the source of the stolen funds, the group converted the embezzled yuan into cryptocurrencies such as Bitcoin. They used sophisticated "coin mixing" techniques across multiple overseas exchanges to obfuscate the transaction paths. This made it extremely difficult for investigators to trace the digital footprints of the laundering operation. Eventually, portions of the laundered cryptocurrency were converted back into yuan through covert channels and deposited into personal and corporate accounts linked to the group [1].

The Haidian District People’s Procuratorate employed advanced electronic data analysis to reconstruct the entire money flow. Facing irrefutable evidence, the criminal network surrendered over 90 Bitcoins. The court handed down prison sentences ranging from three to 14.5 years to the eight defendants, with Feng receiving the longest sentence for being the mastermind behind the operation [1].

This case highlights the growing sophistication of global financial crimes involving cryptocurrencies. Similar large-scale operations have been uncovered in Brazil and the United States. For example, Brazilian authorities recently dismantled a $180 million scheme where hackers stole funds from the banking system and attempted to convert them to Bitcoin and USDT. In the US, Russian crypto CEO Iurii Gugnin has been charged with orchestrating a $530 million fraud through a Miami-based platform [1].

These incidents have prompted lawmakers to consider legislative measures such as cryptocurrency mixer bans, recognizing the challenges posed by decentralized digital assets to traditional anti-money laundering frameworks. Despite such efforts, enforcement remains difficult, as mixing services continue to operate through backend infrastructure even after being officially shut down [1].

Source: [1] Beijing Court Jails Tech Executive 14 Years for $19.5M Crypto Laundering

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