Prosecutors Propose New Framework for Crypto Money Laundering Cases
An article published in the official newspaper of China’s top prosecutors’ office has outlined a potential framework for prosecuting cryptocurrency money laundering, suggesting that courts should presume criminal intent when suspects utilize coin mixers and privacy coins. The proposal also advocates for the state to establish a platform for liquidating seized cryptocurrency.
The piece appeared in the “theory” section of the Procuratorate Daily, the newspaper of the Supreme People’s Procuratorate. Authored by two district prosecutors from Hunan province and a university law professor, the article carries no legal weight. However, such publications offer insight into the evolving legal thinking within China’s prosecution system, which charged over 3,000 individuals with crypto-related money laundering in 2024 alone.
According to the authors, China’s specific money-laundering offense currently encompasses only seven categories of predicate crimes. Consequently, prosecutors often resort to a broader “concealment” charge for crypto cases, a workaround they describe as having become an overextended catch-all.
The authors urge the adoption of a “double investigation of one case” rule. This would involve scrutinizing every underlying crime for laundering activities and requiring investigators to meticulously map the flow of any involved cryptocurrency. This proposal builds upon a 2024 judicial interpretation from China’s Supreme People’s Court, which already classifies the use of virtual asset transactions to move criminal proceeds as a form of money laundering.
The most significant proposals relate to the burden of proof. The authors contend that courts should be empowered to presume a suspect’s intent to launder money unless they can provide “reasonable counter-evidence.” This presumption would apply when suspects employ tools designed to obscure transactions, such as mixers or privacy coins; offload large amounts of cryptocurrency at “obviously unreasonable” prices; or conduct high-frequency, large-scale transfers through anonymous wallets lacking any link to their identity.
Furthermore, the article introduces a “blockchain data self-verification” principle. This would treat on-chain records, verifiable on public block explorers with matching hash values, as presumptively genuine, shifting the onus of proof to any party disputing them. Reports from compliant blockchain analytics firms, including fund flow maps and address clustering, would be admissible as expert evidence. Money laundering could then be established from circumstantial, fragmented evidence, provided it forms a coherent chain, even if not every coin can be traced to its origin.
Addressing Seized Cryptocurrency
The third key aspect of the article addresses the disposition of seized cryptocurrency in China. Beijing’s ban on cryptocurrency trading means that authorities confiscating tokens lack a clear legal avenue to convert them into fiat currency, leaving billions of dollars in assets in a legal gray area.
The article advocates for a national platform to manage and dispose of seized crypto through “compliant channels,” such as directed auctions. It also calls for a standing expert committee to value holdings based on on-chain data and global exchange prices. Additionally, the proposal includes provisions for cross-border deals and a blockchain-based “judicial cooperation chain” to trace and recover assets moved offshore. In practice, local governments have reportedly been discreetly selling seized cryptocurrency through private firms in offshore markets, a workaround that Reuters documented last year and which a formal system would aim to replace.
China outlawed cryptocurrency trading and mining in 2021, yet it remains a significant hub for crypto-based money laundering. Chinese police have dismantled large laundering rings, including a $1.7 billion operation in 2022. According to Chainalysis, Chinese-language laundering networks processed an estimated $16 billion in 2025 and now account for roughly one-fifth of all global crypto money laundering. The firm attributes their rise partly to China’s capital controls, as wealthy citizens moving funds offshore provide the liquidity that enables these networks to launder money for Western organized crime groups.
