Key facts
- Chinese prosecutors are considering new frameworks for prosecuting cryptocurrency money laundering.
- The proposals include presuming criminal intent when suspects use coin mixers or privacy coins without providing reasonable counter-evidence.
- Verifiable on-chain records and reports from analytics firms are suggested as admissible evidence.
- A national platform is proposed for the custody and sale of seized cryptocurrency.
- China banned crypto trading and mining in 2021 but continues to be a significant center for crypto-related money laundering.
An opinion article published in the official newspaper of China's Supreme People's Procuratorate has outlined a potential framework for prosecuting cryptocurrency money laundering. The proposals suggest that courts should presume criminal intent if suspects use mixers or privacy coins without providing sufficient counter-evidence. Additionally, the article advocates for treating on-chain records and reports from blockchain analytics firms as admissible evidence, potentially shifting the burden of proof onto the accused.
The piece, written by district prosecutors and a university law professor, also addresses the challenge of managing seized cryptocurrency in a country where trading is banned. It calls for the establishment of a national platform to custody and dispose of confiscated digital assets through compliant channels, such as directed auctions. This initiative aims to resolve the issue of billions of dollars in seized crypto being held in limbo.
While the article carries no legal force, it offers insight into the evolving thinking within China's prosecution system, which has handled a significant number of crypto-related money laundering cases. The authors note that prosecutors often rely on broader 'concealment' charges due to limitations in existing money-laundering offenses. They propose a 'double investigation of one case' rule to screen all underlying crimes for laundering and map crypto flows.
China outlawed crypto trading and mining in 2021, yet it remains a major hub for crypto-based money laundering. Reports indicate that Chinese-language networks process a substantial portion of global crypto money laundering, partly fueled by the country's capital controls, which can create liquidity for illicit activities. Local governments have reportedly been selling seized crypto through private offshore channels, a practice that a formal system would aim to replace.