The bitcoin market is seeing a new phenomenon, according to the Chinese government. In fact, it is claimed that the usage of digital currency to promote drug trafficking is growing. This worrying situation will be facilitated by the anonymity of cryptocurrency.
Fresh risk in the marketplace
The Chinese government has spotted a new threat in the cryptocurrency market, according to a report. In fact, drug traffickers are already turning to digital currency when seeking for a way to make their illegal activity easier. Chinese police have reportedly observed a change in the flow of money used in drug trafficking. Transfers are now performed to cryptocurrency exchanges from online banking systems. Drug dealers are said to use employ in-game currencies.
“The drug market continues to develop online, with increased use of cash and drug distribution and person-to-person transaction patterns,” according to Chinese police. Drug distribution is handled by bulk logistics and small delivery; drug money transfers are expanded from online bank transfers to virtual currency and in-game currency.
It is obvious that the Chinese government’s decision to outlaw digital currencies was influenced by the way in which they were used to aid drug trafficking. Recall that in 2021, the Chinese government outlawed cryptocurrency-related activities such as mining and trading. He then cited the crypto industry’s threat to financial stability as justification.
The new phenomenon would be brought about by the anonymity of cryptos.
The main reason why cryptocurrency transactions are attracting more and more traffickers is that they are anonymous, which lowers the risk of being discovered. According to data, drug traffickers are changing their digital currency holdings from decentralized exchanges into cash. For instance, it has been claimed that Binance, the most popular cryptocurrency exchange, was used as a conduit to launder more than $2.3 billion in illegal funds.
A research has shown that over $2.2 billion in bitcoin transactions from Chinese cryptocurrency wallets to addresses linked to illegal operations occurred between April 2019 and June 2021, despite the Chinese government’s increasingly stern crackdown.
Separately, it was found that Chinese money launderers allegedly collaborated with international drug traffickers to purchase drugs-making chemicals using cryptocurrencies.
