Bitcoin News Today: China's crypto ban challenged by $19M Bitcoin fraud: 90 BTC seized, 8 jailed

A Bitcoin-related fraud case has drawn attention in China, where the cryptocurrency remains officially banned, according to a report by the Chinese state media outlet People’s Daily. Feng, a former employee of a short-form video platform, exploited his role in overseeing service provider approvals and incentive policies to orchestrate a 140 million yuan ($19 million) scheme. By collaborating with external partners, Tang and Yang, Feng created systemic loopholes to siphon company funds through forged application documents. The stolen funds were converted into Bitcoin using overseas exchanges and laundered via “coin mixing” techniques to obscure the trail. Authorities seized over 90 Bitcoins as part of the case, which resulted in prison terms ranging from three to 14 years and six months for Feng and seven co-defendants [1].

The case underscores persistent challenges in enforcing China’s stringent cryptocurrency regulations. Despite a 2021 nationwide crackdown that shuttered domestic exchanges and mining operations, underground networks continue to exploit weaknesses in compliance. Feng’s position allowed him to manipulate incentive structures, while affiliated companies operated as fronts to channel illicit funds into secret accounts. This incident highlights the adaptability of criminal actors in circumventing regulatory barriers, even as state media increasingly publicizes such cases to deter non-compliance.

China’s approach to Bitcoin remains aligned with its broader financial control agenda. Authorities have long framed unregulated cryptocurrencies as threats to economic stability, tax compliance, and capital controls. The public reporting of this case aligns with a strategy of using high-profile prosecutions to reinforce policy adherence. However, the absence of detailed disclosures—such as the company’s identity or the scale of the Bitcoin transactions—leaves questions about the full scope of the breach. Analysts suggest this may reflect a deliberate effort to avoid amplifying speculative narratives around Bitcoin’s role in China’s digital economy.

The case also intersects with broader debates over China’s regulatory priorities. While the government has emphasized AI governance and economic self-reliance, the persistence of illicit crypto activities complicates its vision for blockchain integration in state-sanctioned financial systems. The seizure of 90 Bitcoins partially offsets the company’s losses, but it does not resolve the underlying tension between strict enforcement and the decentralized nature of cryptocurrencies.

Market reactions to the scandal have been muted, with global Bitcoin prices remaining stable. However, the incident could influence future regulatory actions, particularly regarding central bank digital currencies (CBDCs). Regulators may prioritize cracking down on unregulated crypto activities before advancing state-backed digital currency initiatives. The Chinese government’s focus on reducing reliance on Western financial systems—evidenced by collaborations like gold exchange partnerships with Russia—does not negate the need to control domestic crypto speculation [2].

The lack of immediate disciplinary actions against the implicated company has sparked speculation about the potential for broader investigations. Without clear enforcement mechanisms, such as operational closures or asset seizures, the case may signal a shift toward more aggressive compliance measures. This aligns with China’s historical approach to regulatory enforcement, where high-profile cases often serve as precedents for wider policy adjustments.

As the situation unfolds, the scandal reinforces China’s pivotal role in global crypto dynamics. Despite its domestic restrictions, the country’s expertise in blockchain technology and infrastructure continues to shape the sector. The Feng case illustrates the challenges of enforcing centralized control in a digital economy where decentralized networks inherently resist regulation.

Source:

[1] CoinMarketCap Community (https://coinmarketcap.com/community/articles/68865e8d6eed8e5846f95a2c/)

[2] Intellinews (https://www.intellinews.com/russia-china-to-set-their-own-gold-exchanges-cut-ties-with-western-control-392945/?source=china)