Chinese police have recently reported an alarming increase in money laundering schemes involving Central Bank Digital Currency (CBDC) as the rollout of the digital yuan continues. This has prompted authorities to issue warnings to the public about the risks associated with these fraudulent activities.
Scammer Foiled in Suining, Sichuan Province
According to the Dushichen Newspaper Agency (va JSChina), law enforcement officials in Suining, Sichuan Province, successfully intervened to thwart a scammer. The incident involved a mobile phone store owner named Wang who had fallen victim to a clever scheme.
Wang approached the Suning Chengxi Police Station on November 3 to report that their bank card had been frozen by the police in another part of the country. Suspecting foul play, the police launched an investigation and discovered that a man had visited Wang’s store on November 2. The man asked if he could use digital yuan tokens to purchase handsets.
Wang agreed to the man’s request, and they finalized the deal for two Apple iPhones. However, things took a strange turn when the man overpaid for the handsets by over $140. Wang, thinking it was a mistake, sent the “extra” money to the man’s Alipay account.
On the following day, the same customer returned and expressed interest in buying two more mobile phones using the same payment method. This raised Wang’s suspicions, prompting the store owner to visit a local bank branch to inquire about the payment’s status. It was then revealed that the customer’s digital yuan wallet had been frozen by the police in Henan.
The police took swift action by contacting the store’s CCTV surveillance provider, identifying the customer, and subsequently making an arrest. The customer, identified as Wei, admitted to using his digital yuan wallet to assist others in money laundering. Further investigation revealed that Wei had engaged in 14 similar fraudulent acts across different cities, defrauding vendors out of more than $28,100.
Police Warnings and Ongoing Fraud Cases
Chinese police are urging the public to exercise caution when approached by individuals requesting “digital renminbi exchange” transactions. They also advise citizens to be wary of attempts to obtain their login details and wallet passwords. Authorities have observed a rise in criminals impersonating bank and public security agency staff to access CBDC wallet passwords.
In 2021, cases of CBDC-related fraud have been on the rise, with a notable incident of digital yuan-powered money laundering uncovered in March last year. Recently, police in Wuhan arrested 27 individuals suspected of operating a $140 million crypto-powered money laundering operation.
