Several cryptocurrencies have been implicated as the biggest facilitators of crypto crime in China.
Citing data from a large number of valid cases related to crypto fraud and money laundering, Ethereum, USDT, and TRON emerged as the most often used cryptocurrencies in 2021.
USDT was involved in the most crypto crimes in China
The report published by CHAINDIGG, a Chinese blockchain big data service company, gave a breakdown of the main types of cases, and the amount of cryptocurrencies used during 2021.
Crypto pyramid schemes were the most common type of crypto crime, cumulatively accounting for 67.82% of reported cases. Money laundering cases ranked second in frequency of occurrence. However, the average amount of crypto involved in money laundering was around 90 million by the firm’s estimate.
In comparison, virtual currency online gambling had the most crypto spending while ranking fourth in frequency of occurrence. Over 2.14 billion yuan in crypto was spent on gambling in China last year.
The report notes that stablecoins were the main facilitator behind the illegal use cases of crypto in China. Among these, USDT accounted for about 80% of illegal crypto spending.
Stablecoins have become the main force, and USDT has the highest proportion of cases involved… USDT has the highest proportion of cases involved, occupying the absolute main position, the report noted.
Other favorites included TRON (TRX) which was preferred by MLM criminals and Ether (ETH) which was commonly involved in fraud and money laundering.
The report is coming after Chinese police recently clamped down on a pyramid scheme involving Ripple’s XRP tokens and over 45,000 investors.
China has seen a net outflow of funds since banning crypto
CHAINDIGG’s report also highlighted the effect that China’s ban on crypto has been having on the country’s involvement in crypto. In 2021, domestic outflow of crypto funds was far greater than inflows. Around 223 billion yuan left the shores of China, mostly headed to US crypto exchanges. “Among them, 2.3 billion USDT and 830,000 BTC outflow,” the report said.
In banning cryptocurrencies, China often cited fraud and money laundering concerns, as well as environmental concerns as its major reasons. It continues to clamp down on the sector to smoke out defaulters. However, with such massive outflows of funds, the Chinese economy will likely feel the effect of capital flight.
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