- Ex-tech exec laundered ¥140M using fake invoices, offshore crypto exchanges, and coin mixing to obscure transaction trails.
- Despite using coin mixers, authorities traced and seized over 90 Bitcoin via advanced blockchain analytics and forensic tools.
- China plans to liquidate seized crypto via Hong Kong exchanges, revealing gaps in oversight amid rising crypto-driven fraud.
A complex crypto laundering operation has been exposed in China, involving millions in stolen corporate funds and offshore digital asset exchanges. Prosecutors in Beijing cracked down on a ring led by a former tech executive surnamed Feng, who diverted ¥140 million (about $19.5 million) from his employer.
The embezzled funds were laundered using overseas crypto platforms and coin mixing services, revealing vulnerabilities in enterprise oversight and digital asset traceability.
Executive Exploits Loopholes and Weak Oversight in Payout System
Feng, who approved incentive payouts at a short video tech firm, reportedly exploited his position to authorize fake invoices. Prosecutors said he collaborated with external vendors to reroute funds into personal accounts. These funds were then moved to eight overseas crypto exchanges, where they were converted into Bitcoin and other digital currencies.
Notably, authorities traced how Feng later converted some of the digital assets back into yuan and transferred them into mainland accounts. These transfers, according to the Beijing Haidian People’s Procuratorate, involved coin mixing strategies that complicated tracking efforts.
Coin Mixing Tools Fail to Conceal Full Transaction History
To disguise the stolen money’s origin, Feng and his team utilized coin mixing, a method that pools and redistributes assets to blur transaction histories. However, despite this technique, prosecutors succeeded in reconstructing the fund flow using advanced analytics.
According to Li Tao, a prosecutor in Haidian’s hi-tech crimes division, investigators followed the laundering chain step-by-step. They traced how the money was stolen, converted, mixed, and then re-entered the banking system.
Prosecutors eventually seized over 90 hidden Bitcoin, worth nearly $11 million, and secured Feng’s conviction, sentencing him to over 14 years in prison.
China Seizes and Liquidates Crypto, Despite Trading Ban
While crypto trading remains banned in mainland China, authorities continue to confiscate and liquidate assets via Hong Kong. Just last month, Beijing police outlined a new plan to sell seized tokens through licensed Hong Kong exchanges in partnership with the China Beijing Equity Exchange.
This follows previous seizures, including the Yancheng city case in 2020, where 195,000 Bitcoin from a Ponzi scheme were confiscated. The extent of crypto held by Chinese authorities remains unclear. Seven individuals were convicted alongside Feng.
Sentences ranged from three to over 14 years. The case, listed in a prosecutorial whitepaper covering 1,253 corruption cases in tech firms, identified trends in crypto-driven fraud. Prosecutors linked the surge in abuse to lax internal controls, especially in AI and e-commerce sectors.
Coordinated Forensics and Data Analytics
Using digital forensics and blockchain analytics tools developed by local firms like Beosin, Salus Security, and SlowMist, investigators were able to link overseas exchanges to local banks.
Dan Dadybayo of Unstoppable Wallet noted that pattern recognition, statistical clustering, and timing analysis supported the fund tracing. The Haidian People’s Procuratorate emphasized that such cases show emerging corruption trends in China’s tech sector, where crypto use is rising despite legal restrictions.
