The country has stepped up its anti-money laundering and anti-fraud efforts. Recently, some bank cards used to purchase cryptocurrencies have been frozen.

Source: Huaxia Daily

Author: Ran Xuedong, Wang Yongfei

Original title: "The country has stepped up its anti-money laundering and anti-fraud efforts. Some bank cards used to purchase cryptocurrencies have been frozen recently."

Recently, many people in the cryptocurrency circle have had their bank cards and Alipay accounts frozen due to their participation in cryptocurrency OTC transactions, which has attracted public attention. Our reporter learned that the card freezing incident originated from the police's discovery of a money laundering case using cryptocurrency in OTC , which resulted in the freezing of multiple levels of "stolen money" accounts associated with the money laundering account. As the card freezing area was large this time, it caused panic among cryptocurrency enthusiasts.

The fines for anti-money laundering announced by the central bank in the first quarter of this year are almost the same as the amount of last year, so the central bank has stepped up its efforts in anti-money laundering and anti-fraud. This year, the police have cracked several large-scale money laundering cases using cryptocurrencies. In May, the Guangdong police arrested a gang that used virtual currency to launder money. It is not uncommon for criminals to use virtual currency to defraud, launder money, and engage in illegal gambling, which has also attracted great attention from the police and the central bank.

The whole story of the card freezing incident

A lady whose card was frozen told our reporter:

"Not long ago, I used a bank card to buy cryptocurrency on a mainstream crypto platform. When I went to the bank on June 7 to handle the business, the counter staff told me that my bank card was frozen. I was a little shocked at the time, but later I learned from the Internet that many people's cards had been frozen recently. They were suspected of money laundering, but I didn't participate in any illegal activities. I was very puzzled why my card was frozen. I still can't use the card. The bank said that the card was frozen by the police and I just need to wait for notification."

Our reporter learned that Lou Jiyue, the wife of Yi Lihua, an early entrepreneur and cryptocurrency investor, also posted on WeChat Moments: "Have many cards been frozen recently? Why are all three of my cards frozen?"

In addition, our reporter also interviewed a Bitcoin miner, who said:

"My bank card was frozen recently. The bank said to wait for news. I can unfreeze it with my ID card and relevant information when I get a notification. As we all know, miners often buy and sell large amounts of digital currencies. It is a bit unexpected to be involved in money laundering, but it is understandable. Once there is a problem with an OTC trader familiar to miners, we can easily be involved."

Our reporter learned that the three major domestic exchanges have relatively complete trading systems. If they discover any improper transactions, they will immediately take measures to intercept them, freeze accounts, and cooperate with the police in anti-money laundering operations.

The reason for the card freezing incident is still unknown, but whether bank cards, Alipay and WeChat can be used to purchase cryptocurrencies has also caused a lot of confusion and anxiety for crypto enthusiasts.

Are there risks in purchasing cryptocurrencies with bank cards, Alipay and WeChat?

Recently, there have been rumors circulating online that due to purchasing cryptocurrencies, Alipay has been frozen or there have been risk prompts that the purchase page is directly exited. In order to investigate whether there are risks in purchasing cryptocurrencies using bank cards, Alipay and WeChat, this newspaper's reporter contacted the personnel of the above-mentioned payment companies for consultation.

Our reporter consulted the customer service of China Merchants Bank, Bank of China, Agricultural Bank of China, China Construction Bank and Industrial and Commercial Bank of China, and the responses from each bank were roughly the same:

" As long as the operation is legal, the channel is legal, the source of virtual currency is legal , and the page supports bank card services, the bank card will not actively freeze the user's funds unless it involves illegal cases such as money laundering and fraud."

This newspaper's reporter logged into the pages of various virtual currency exchanges. OTC transactions can be conducted using Alipay, WeChat, and bank card accounts of major banks, and there is no risk warning page when operating transactions.

The Alipay Security Center's Weibo post in October 2019 stated: Alipay is prohibited from being used for virtual currency transactions. If a transaction is found to involve Bitcoin or other virtual currency transactions, Alipay will immediately stop the relevant payment service. Merchants involved in virtual currency transactions will be resolutely cleared out; for personal accounts suspected of virtual currency transactions, measures such as limiting the account's payment function or even permanently restricting payment will be taken according to the circumstances.

Our reporter called the Alipay fund security department to inquire whether it is possible to buy cryptocurrencies. The management department staff responded: "As long as there is an Alipay payment page and the operation must be legal, there will be no fund freeze or account freeze."

According to the feedback from the above-mentioned banks and Alipay, when using bank cards and Alipay accounts, the purchase of cryptocurrencies through legal transactions and operations will not result in account freezing. However, industry insiders remind us: "It is best not to use bank cards with important purposes to purchase cryptocurrencies, such as debit cards for mortgages and car loans, and salary cards. Develop the habit of using specific cards for specific purposes."

However, from a policy perspective, the government’s attitude towards cryptocurrencies is very clear. The attitude of “closing the gates and prohibiting transactions” has led domestic companies engaged in crypto-related transactions to register companies overseas in order to avoid government supervision, and to develop and operate domestically, with almost no exceptions.

The Chinese government's latest bill on cryptocurrency was proposed in 2019, when the Standing Committee of the 13th National People's Congress of China approved a new bill that provides regulations for cryptocurrency. The regulations will introduce a new central cryptocurrency agency responsible for providing guidance for cryptocurrency activities and proposing appropriate policies for cryptocurrency scenarios. When it was announced to the public in May 2020, the draft bill discussed cryptocurrency technology, mainly the development of cryptocurrency technology and the use of technologies such as hashing algorithms.

According to the current situation, cryptocurrencies are also being severely cracked down in the Hainan Free Trade Zone, and there is still a long way to go before cryptocurrencies can be compliant and legal in China.