China’s Police Force Reveals Offshore Exchange Surveillance

According to regional reports, China’s police agency is allegedly monitoring cryptocurrency exchanges based outside of the country. An informant details that China’s Public Information Network Security Supervision task-force is closely watching both domestic and foreign trading platforms involved with cryptocurrencies to prevent fraud, pyramid schemes, and money laundering.

Also Read: British Man in Amsterdam Allegedly Laundered €11.5m in Bitcoin Drug Money

China’s Regulators Are Watching Offshore Exchanges Dealing with RMB Closely

The local financial publication Yicai reports that China’s network security agency and police force is monitoring exchanges dealing with virtual currencies even if they are based abroad. The regulatory crackdown is being led by the Ministry of Public Security and other Chinese government agencies. According to an insider familiar with the matter, Yicai explains that the investigators are looking for possible Ponzi schemes, fraudulent trading activities, tax evasion, and money laundering crimes.

Even though many trading platforms moved offshore, the publication’s source explains they still monitored the exchanges “synchronously.” “As for the next step there will be further regulatory measures, but also to wait for the notification of higher officials,” explains the insider speaking with the regional publication.

ICO Projects and Domestic Exchanges Evade Regulations by Setting Up Businesses and Servers Internationally

The translated report further states that China’s regulatory authorities have witnessed initial coin offering (ICO) projects and domestic exchanges evade the country’s laws by setting up operations outside of China, registering the businesses offshore, and moving their servers as well.

“To this end, Chinese regulators will conduct a review of domestic bank accounts and online payment accounts for businesses and individuals suspected of helping domestic investors to make digital currency transactions at overseas exchanges,” the report details.

If the trading account is frozen, the exchange can no longer continue its operations, otherwise it is easy to involve illegal fund-raising, money-laundering and other criminal activities. 

Additionally, regulators are aware of the large amounts of over-the-counter (OTC) trading taking place outside of the country but with the operations still servicing customers dealing in RMB. “These platforms, while moving servers overseas, still ‘open doors’ to domestic users,” explains the news outlet.

What do you think about China’s police force and other authorities monitoring offshore exchanges? Let us know what you think in the comments below.

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