China busts $295 million underground bank that used crypto to convert foreign currencies

China has busted an underground bank that illegally used cryptocurrency to conduct currency exchange operations between the Chinese yuan and the South Korean won — involving at least 2.14 billion yuan ($295.8 million).

The local police published a state media report on Sunday saying that authorities in Northeast China’s Jilin province arrested six suspects who allegedly facilitated the case in China and South Korea.

The police explained that the suspects allegedly exploited features of cryptocurrency, such as anonymity in transactions and decentralization, to conduct foreign currency exchange operations illegally.

The police found that the criminal group used domestic accounts to receive and transfer funds and conducted over-the-counter cryptocurrency transactions. They allegedly assisted companies — such as South Korean purchasing agents, cross-border e-commerce platforms, and import and export trade firms — in currency exchanges between the Chinese yuan and the South Korean won.

Over the years, China has implemented tight capital control policies — leading some to use cryptocurrency to circumvent the rules.