Guangdong Police Freeze Thousands of Bank Accounts Suspected of Money Laundering
Authorities in Guangdong province have frozen thousands of bank accounts linked to over-the-counter (OTC) cryptocurrency traders amid a broad crackdown on suspected money laundering and other illicit activities. According to reporting by 8btc, the operation began on June 4 and has affected at least 4,000 accounts believed to be involved in converting so-called “grey earnings” through open OTC markets.
In recent months, Chinese police have intensified efforts to combat crypto-related fraud and illegal gambling. Law enforcement agencies have received training in blockchain and on-chain analysis to improve their ability to trace cryptocurrency flows. 8btc notes that Tether (USDT) is commonly used in these illicit schemes, and some OTC traders are accused of accepting cash from telecom fraudsters, crypto scammers and other illegal sources.
The Guangzhou city police say the province’s USDT market draws funds from a variety of sources beyond institutional investors. In one example cited by authorities, scammers set up a fake Huobi exchange to defraud traders and siphon funds through OTC exchangers, resulting in losses exceeding 3.5 million yuan (roughly $495,000).
To monitor and disrupt these flows, police combined bank records, blockchain data, crypto addresses and other transaction logs to identify major transfers routed through OTC channels. Reports indicate that even accounts belonging to traders who stopped trading months ago have been frozen as part of the probe.
Sun Xiaoxiao, a former employee of Chinese crypto wallet provider Bixin, publicly reported his own bank account freeze via a Weibo post last week, warning that his case was not isolated. In a follow-up post, Sun said he believes authorities are investigating Ponzi schemes, telecom fraud networks and casino operations.
“Now there are also OTC merchants who had their bank accounts frozen because of questions over the source of the coins they bought,” Sun wrote, adding that beyond “dirty money” there are also “dirty coins” in circulation. He observed that while Bitcoin was once the preferred vehicle for moving high-risk capital in China, USDT has become the current favorite.
Frozen accounts are not automatically evidence of wrongdoing; they can be released if account holders demonstrate their innocence and authorities find no proof of illicit activity. The time required to unfreeze an account will vary depending on the complexity and severity of the investigation, Sun noted.