In a recent ramp-up against financial fraud, authorities in Beijing have apprehended eight individuals for orchestrating a sophisticated Bitcoin-related scam that resulted in the theft of around 140 million yuan (approximately $20 million) from a popular short-video platform, subsequently diverting the funds into cryptocurrency investments.
The People’s Procuratorate of Haidian District revealed in a comprehensive report that this incident stands as one of the most intricate anti-corruption cases documented from 2020 to 2024. What initially appeared as minor bonuses within the corporate structure evolved into a prolonged scheme that concealed misappropriated funds through a mesh of shell companies and virtual currency transactions.
Exploiting Corporate Weaknesses
Reports indicate that an insider named Liu wielded exclusive authority over onboarding service providers, determining eligibility for bonuses as well as managing payouts. He manipulated bonus policies meticulously, creating loopholes available solely to him and two external accomplices, Chen and Zhang.
With the assistance of fabricated documentation, Liu provided access to sensitive information which allowed them to bypass internal checks. Instead of channeling funds to genuine employees, they diverted bonus payments into fictitious accounts. When auditors finally became aware of the discrepancies, nearly 140 million yuan was already unaccounted for.
Shell Operations and Money Laundering
The trio set up a series of shell corporations lacking tangible operations to facilitate their fraudulent activities. Chen took charge, directing collaborators to establish approximately a dozen of these fictitious entities.
These companies acted solely as conduits for siphoning off the fraudulent bonus payouts. Once the ill-gotten gains were collected, they traversed through several bank accounts before finally reaching Zhang’s hands. Liu then directed the critical conversion of these funds into cryptocurrency.
The proceeds were then divided across various international exchanges, making extensive use of coin mixing services to obfuscate any clear trail regarding the origins of the funds.
Authorities Track the Digital Footprint
Prosecutor Wang Lijun of Haidian’s Cyber Crime unit meticulously reconstructed the financial misconduct’s landscape. By analyzing corporate data logs, bank statements, and blockchain transactions, the team uncovered each façade of deceit behind the scam.
During the investigation, authorities succeeded in recovering more than 90 Bitcoin, providing concrete evidence of the “closed-loop” laundering technique employed. Each retrieved coin could be traced back to the original theft, validating the intricate web spun around the stolen resources.
Sentencing reflected the distinct roles played by each individual involved. Liu faced the harshest penalty—16 years in prison—while the others received sentences ranging from four to 15 years, alongside significant financial penalties.
All suspects were convicted of embezzlement. This case powerfully illustrates that concentrated control within an organization can turn even standard operational processes, like bonuses, into conduits for substantial fraud. Furthermore, it reinforces that no modern crypto mechanism offers absolute anonymity indefinitely.
Featured image from Unsplash, chart representation from TradingView
