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Popular Chinese Crypto Trader Taken to Court over Links to Money Laundering of Online Gambling Proceeds

An Hangzhou city district court has started the trial against one of the most notable crypto traders in China Zhao Dong, who has allegedly assisted Internet crimes, including money laundering associated with online gambling and other criminal activities. If found guilty, Mr. Zhao could face a jail sentence of up to three years, although he has already been detained for almost a year.

The case has drawn massive attention, considering the fact that Zhao Dong has been one of the major figures in China’s crypto community since the beginning of 2010 and his position as the head of OTC (over-the-counter) crypto-lending platform RenrenBit.

The trial of a criminal case against the OTC trader has started at the Xihu District Court in Hangzhou. Mr. Zhao faced charges with assisting internet criminal activities, as seen on the live stream page of the trial in the middle of the week. According to the codified legislation of the country, this crime involves the provision of information technology, including network storage, internet access, telecommunication, payment settlements and advertisement promotion to someone who is committing a crime over the Internet.

If convicted, the defendant could face up to three years in jail depending on how severe the crime is found by the court, as well as a monetary fine.

More than $7 Billion Generated by Online Gambling and Other Illegal Activities Washed

Zhao Dong was detained by police at the end of May 2020, at a time when the country’s authorities started imposing stricter measures on altcoin and bitcoin miners. The Chinese Government has revealed an intention to suspend all domestic and foreign cryptocurrency exchanges and initial coin offering platforms.

Reportedly, Mr. Zhao is accused by prosecutors of participating as a transactional counterparty for an Hangzhou-based operation that aimed at laundering some dirty money through a “Paofen platform” – an application that allows users to earn bonuses and rewards when their friends register.

The platform has been created by the Hangzhou operation, with users using their personal and bank details to register. As it has been revealed, criminals were then able to use the pooled accounts to send and receive transactions so many times that, in the end, the money became almost impossible to trace.

A total of 85 people, along with Mr. Zhao, were arrested by the local police forces in May 2020 in relation to the case. The prominent crypto OTC trader has allegedly acted as a transactional counterparty for a money-laundering scheme known as “Day Day Up”.

According to a report published in February, the team involved in the Day Day Up scheme started the operation two years ago, with over $7 billion in proceeds from unlawful activities such as online gambling having been laundered in a 5-month period through payment accounts of more than 70,00 registered users. The report also revealed that the scheme provided the so-called “Paofei” service for 1,900 cases of online gambling and telecommunication fraud, with proceeds of about $4.6 billion having been sent overseas.

 Author: Hannah Wallace

Hannah Wallace has been part of our team since the website was launched. She has a master’s degree in IT.