Top crypto figure on trial in China over online gambling dirty money laundering

One of the most well known crypto traders in China went on trial this week. He is accused of “assisting internet criminal activities” for alleged role in the laundering of billions of dollars linked to online gambling.

Zhao Dong is the head of over-the-counter crypto-lending platform RenrenBit, and has long been a key figure in the Chinese crypto community.

He was detained in May last year, at a time when Chinese government began cracking down on bitcoin and Altcoin miners.

According to The Block Crypto, Zhao is accused of being a “transactional counterparty” for an operation based in Hangzhou that used a Paofen platform to wash dirty money.

Paofen literally means “points-scoring,” and denotes an app where users can earn rewards, along with bonuses, for signing up friends.

The operation created a Paofen platform where users signed up by sharing details of their bank accounts, as well as any mobile payment platforms popular in China, like AliPay or WeChat Pay.

Criminals could then use these pooled accounts to send and receive transactions, shuffling payments until money was almost impossible to trace.

Hangzhou police arrested 85 people in May 2020, along with Zhao, in relation to the case. This included the team that created the platform, which was named “Day Day Up”.

China has been fighting against cross border gambling in recent years, the crackdown on crypto is part of the battle, aim to eliminate the money laundering channels that facilitate capital flight so it can maintain control over its international balance sheet, exchange rate, and foreign currency reserves.

Editing by Rachel Hu