A senior executive from the massive short video company Kuaishou was sentenced to 14.5 years in prison for masterminding a complex embezzlement and cryptocurrency-laundering operation, making this one of China’s most well-known cryptocurrency crime cases to date. The scam involved nearly 140 million yuan (approximately $19.5 million) and relied heavily on Bitcoin and coin-mixing techniques to hide the stolen money.
This case not only highlights growing concerns about crypto-related crime but also shows how Chinese authorities are ramping up efforts to track, investigate, and punish illegal activities involving digital currencies, despite the country’s official ban on crypto trading.
How the Kuaishou executive’s scheme worked
The main accused, referred to by his surname Feng, was a technology executive at Kuaishou, one of China’s biggest social media platforms and a direct competitor to TikTok. Feng used his internal access and authority to exploit the company’s service provider rewards program, which was designed to attract and incentivise new business partners.
Feng and seven accomplices, including two outsiders named Tang and Yang, manipulated the bonus system by creating fake accounts and submitting fraudulent applications that appeared to meet reward criteria. These fabricated service providers then “earned” millions in platform subsidies that should have gone to real users.
To cover their tracks, the stolen money was transferred through multiple shell companies and ultimately converted into cryptocurrencies via eight overseas exchanges. The group used “coin mixers”—tools that intentionally mix cryptocurrency transactions from various users to make the origin of funds difficult to trace.
Advanced investigations and Bitcoin recovery
Leading the investigation was Prosecutor Li Tao of the Haidian District People’s Procuratorate, who applied advanced data forensics and blockchain tracing techniques to map the flow of stolen funds.
The efforts paid off: investigators successfully recovered more than 90 Bitcoins, currently worth over $11 million, and ordered Feng to forfeit these assets.
The Chinese judiciary’s huge penalties on the Kuaishou executive
All eight individuals involved were found guilty of occupational embezzlement. Feng, considered the mastermind, received the longest sentence—14 years and six months, along with heavy fines. Other sentences ranged from 3 to 14 years, depending on their level of involvement.
The court also ordered the confiscation of personal assets from the accused.
Prosecutor Li summarised the case as an example of modern digital-era financial crime, stating it showed:
- Small officials, big corruption
- Money laundering with virtual currency
- Lack of corporate risk control
Crypto crime in a country where crypto is banned
China made it illegal to mine, trade, or offer financial services using Bitcoin in 2021. However, digital assets continue to be used in illegal activities such as money laundering and fraud. This case is part of a growing list of crypto-related prosecutions in the country.
A white paper by the Haidian Procuratorate revealed that from 2020 to 2024, China prosecuted over 1,200 commercial corruption cases, many involving the misuse of cryptocurrencies.
What happens to seized crypto in China?
The government has seized billions in digital assets over the years. For example, authorities in 2020 confiscated 195,000 Bitcoins from a Ponzi scheme, which would be worth more than $23 billion today.
Beijing uses authorised Hong Kong exchanges through CBEX in order to lawfully manage these assets. Seized crypto is sold, turned into yuan, and then placed into official accounts.
Aftermath of the Kuaishou case
This case reveals several important lessons. First, it shows that Chinese authorities are becoming highly skilled at tracking even anonymised cryptocurrency transactions, thanks to advancements in digital forensics. Second, it highlights how tech companies must strengthen internal security controls, as insider fraud can exploit even well-designed systems. Lastly, it proves that cryptocurrencies are still being used for money laundering, despite strict bans, pushing regulators to increase surveillance and seek more global cooperation.
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