Authorities in Guangdong province have frozen more than 4,000 bank accounts connected to over-the-counter cryptocurrency merchants, marking an escalation in China's crackdown on financial crimes. The
Authorities in Guangdong province have frozen more than 4,000 bank accounts connected to over-the-counter cryptocurrency merchants, marking an escalation in China's crackdown on financial crimes. The enforcement operation commenced June 4, targeting individuals suspected of converting illegally obtained funds through digital asset channels.
The investigation's focus centers on Tether (USDT), which authorities believe facilitates illicit financial flows. Police in Guangzhou determined that money entering the OTC market originates from sources beyond institutional investors. Using bank records, blockchain analysis, and transaction data, investigators identified suspicious payment patterns flowing through peer-to-peer trading channels.
Law enforcement has substantially strengthened its technical capabilities in recent months. Officers have received instruction in blockchain technology and address tracking methods, enabling more sophisticated pursuit of crypto-related criminal cases. The broader initiative targets fraud schemes, illicit gaming operations, and telecommunication scams.
Evidence of criminal misuse abounds. Perpetrators created a fraudulent Huobi exchange to victimize traders, netting 3.5 million yuan ($494,944). Such schemes have prompted regulators to scrutinize the sources of capital entering unregulated trading venues.
Industry participants are publicly discussing the freezing campaign. Sun Xiaoxiao, formerly employed at wallet startup Bixin, posted on Weibo describing his account freeze and noting the phenomenon affects far more traders than individual cases might suggest. Police appear to be investigating multi-level pyramid operations, telecommunications fraud networks, and gambling enterprises.
Sun explained the emerging problem in stark terms: "OTC merchants now face frozen accounts merely because authorities question where their digital coins originated. Beyond dealing with illegitimate currency, we're contending with illegitimate cryptocurrency circulating through markets." He observed that USDT has supplanted Bitcoin as the favored medium for moving capital through questionable channels in China.
The legal situation for users contains some recourse. Individuals can petition for account restoration by establishing the legitimacy of their transactions, provided investigators find no wrongdoing. Nevertheless, the timeline for release varies depending on case complexity and severity.
