The Conviction of Zhao Dong: A Major Event in China’s Crypto Crackdown
The over-the-counter (OTC) cryptocurrency trading desk RenrenBit was founded by Zhao Dong, who is notoriously known as the “OTC King.” However, Zhao Dong has recently been found guilty in China of the charges against him. This conviction is a significant event in the context of China’s increasing crackdown on criminal operations using cryptocurrencies.
An in-depth investigation that delved into sophisticated financial dealings led to the conviction of Zhao Dong. The authorities relied on a variety of evidence, including confessions, communication logs, financial records, and witness testimonies, to build their case against Zhao and his friends. While Zhao and his colleagues argued that their conduct was restricted to transactions involving digital currency and did not constitute criminal trading in foreign exchange, the prosecution presented proof of foreign exchange in their conversation logs, challenging their defense.
During the trial, it became evident that Zhao had received money from individuals in other countries. A comprehensive operation was uncovered, in which Zhao and other individuals in Dubai gathered funds in the form of dirhams, used these dirhams to purchase Tether, and facilitated the illicit resale of Tether for Chinese yuan (RMB) by local organizations.
As a result of the court’s verdict, Zhao Dong has been sentenced to seven years in jail and fined 2.3 million Chinese yuan, equivalent to around $325,000. This verdict demonstrates China’s stringent regulatory position against cryptocurrency trading for financial purposes, particularly through channels like over-the-counter (OTC) desks, private chat groups, and transactions using stablecoins such as Tether.
Zhao Dong’s operation involved intricate trading schemes using the Chinese yuan and other currencies. The investigators focused on the movement of funds between Chinese bank accounts, cash pools located abroad, and transactions using Tether and Bitcoin. One of the schemes involved coordinating crypto-fiat transfers between businesses in Dubai and domestic Chinese connections, highlighting a vast network of financial activities spanning multiple nations.
This conviction serves as a warning to individuals participating in cryptocurrency trading in places where it is strongly regulated or outlawed. China’s crackdown on criminal operations using cryptocurrencies is a clear indication of the risks involved in engaging in such activities.