In a trial unfolding at London’s Southwark Crown Court, prosecutors have revealed details of an alleged Bitcoin (BTC) laundering scheme connected to a £5 billion ($6.3 billion) fraud case originating from China.
The trial centers around Wen Jian, a woman accused of converting Bitcoin into cash and property to help launder the proceeds of the massive fraud, which targeted approximately 130,000 Chinese investors between 2014 and 2017, per a Reuters report.
Wen Jian, aged 44, faces three charges of money laundering but is not accused of direct involvement in the underlying fraud.
Prosecutors allege that the fraud was orchestrated by Zhang Yadi, also known as Qian Zhimin, who is named as the beneficiary of the alleged money laundering on the indictment.
Zhang Fled to UK in 2017
According to prosecutor Gillian Jones, Zhang fled to the UK under a false identity in 2017 as Chinese authorities began investigating the fraudulent scheme.
While individuals associated with the scheme have been arrested in China, Zhang remains at large, and none of the stolen funds have been returned to the investors.
Jones informed the jury that Wen acted as a “front person” for Zhang, aiding in disguising the origin of the stolen money by using Bitcoin to transfer the proceeds out of China.
Upon Zhang’s arrival in London, the funds needed to be converted back into cash or other high-value assets such as property or jewelry, as explained by the prosecutor.
While Wen does not dispute her involvement in dealing with Bitcoin, the jury’s focus is on determining whether she had knowledge or suspicion that the Bitcoin she handled constituted the proceeds of a crime.
The trial, which began recently, is expected to conclude in March.
UK to Expand National Crypto Crime Unit
The UK’s National Crime Agency (NCA) is set to increase its cryptocurrency fraud investigation unit as part of wider plans to restrain financial crimes.
As part of the move, the agency will hire four new senior investigators to join the financial crime unit to tackle all forms of corruption and fraud cases on the blockchain.
The Complex Financial Crime Team (CFCT) will also get a new Digital Asset Disclosure Officer across multiple jurisdictions.
The team will work with a special surveillance unit alongside the police department as it investigates high-profile fraud and money laundering cases perpetrated by organized criminals.
“It involves inquiries into criminal activity within virtual arenas, the high end of high harm cryptocurrency and virtual assets fraud and money laundering offenses carried out by significant organized crime groups and state actors.”
Likewise, the European Banking Authority (EBA) has proposed plans to update the Anti-Money Laundering and Combatting the Financing of Terrorism (AML/CFT) rules for crypto providers.
The EBA’s proposals include the integration of AML/CFT criteria for payment service providers and crypto asset service providers (CASPs).
The goal is to streamline regulations and promote interoperability among these entities.
By enhancing the interoperability of their protocols, CASPs will be required to “enable the transmission of information in a seamless and interoperable manner.”