Chinese prosecutors float to address cryptocurrency mixing, privacy coin used as evidence of money laundering

An article in the Official Gazette of China’s Prosecutor General’s Office laid out a framework for prosecuting crypto money laundering, suggesting that courts should assume criminal intent when suspects use Coin mixers and Privacy coinsThe state will build a platform to sell confiscated cryptocurrencies.

I ran the piece in Theory Department Follower Daily prosecutionthe newspaper of the Supreme People’s Procuratorate, was written by two Hunan Provincial prosecutors and a university law professor. It carries no legal force, but articles like it provide a window into the thinking taking shape within China’s prosecutorial system More than 3,000 people were charged With cryptocurrency-related money laundering in 2024 alone.

charging gap

China’s designated money laundering offense only covers seven categories of predicate crimes, so prosecutors often turn to the broader “concealment” charge to prosecute cryptocurrency cases, the authors point out, a workaround they say has been bloated to become too comprehensive.

They are urging a “double-case investigation” rule that would examine each underlying money laundering crime and require investigators to map the flow of any cryptocurrencies involved, based on 2024 Judicial interpretation From the Supreme People’s Court of China which already deals with the use of virtual asset transactions to transfer criminal proceeds as a form of money laundering.

Blenders as a red flag

The boldest proposals concern proof. The authors argue that courts should be able to presume a suspect intends to launder money, unless the suspect presents “reasonable counterevidence,” when they use tools designed to hide transactions such as mixers or privacy coins, offload large amounts of cryptocurrencies at “manifestly unreasonable” prices, or make high-frequency, large-scale transfers through anonymous wallets without any connection to their identity.

They also introduce the principle of “self-verifying blockchain data” using on-chain records that can be verified in a public block explorer and, with matching hash values, will be treated as real by default, shifting the burden on those who challenge them. Reports from compliant blockchain analysis companies, such as money flow maps and address aggregations, can be considered expert evidence, and money laundering can be proven from circumstantial and fragmentary evidence as long as it forms a coherent chain, even if not every coin can be traced back to its source.

The problem of seized currency

Part Three looks at what China should do with cryptocurrencies once they seize them. Because Beijing bans trading, the authorities that confiscate the currencies have no clean, legal way to disburse them, leaving billions of dollars in limbo.

The article calls for the creation of a national platform for the safekeeping and disposal of seized cryptocurrencies through “compliant channels” such as directed auctions, a standing panel of experts to value holdings against on-chain data and global exchange rates, cross-border deals as well as a blockchain-based “judicial cooperation chain” to track and recover assets transferred abroad. In practice, local governments were already quietly selling seized cryptocurrencies through private companies in overseas markets, an alternative solution Reuters It was documented last year that the formal system is supposed to replace it.

China banned cryptocurrency trading and mining in 2021, but it remains one of the busiest fronts for cryptocurrency-based money laundering. Chinese police dismantled large rings, including A A money laundering operation worth $1.7 billion in 2022, while Chinese-language money laundering networks processed an estimated $16 billion in 2025 and now handle nearly a fifth of all crypto money laundering operations worldwide, according to String analysis. The company attributes its rise in part to China’s capital controls, where wealthy citizens moving money abroad provide liquidity that allows networks to launder money for Western organized crime groups.