A Beijing court sentenced a former technology firm executive to 14 years and six months in prison on Tuesday for embezzling 140 million yuan (US$19.5 million) and laundering the funds through crypto.
The executive, surnamed Feng, held responsibility for approving incentive payouts at a short video platform.
Prosecutors said he colluded with external vendors to submit false claims and reroute corporate funds into accounts he controlled. The money was then converted into Bitcoin and other digital assets across eight overseas trading platforms.
The case is marked by three features: “petty officials committing major corruption, laundering through virtual currency, and weak enterprise risk awareness,” prosecutor Li Tao explained to the local paper People’s Daily, with the report first cited by South China Morning Post.
To obscure the origin of the funds, Feng and his associates employed coin mixing techniques: tools that obfuscate blockchain transaction trails by pooling and redistributing crypto assets. Authorities traced the flow and ultimately recovered over 90 Bitcoin, worth almost $11 million at current prices.
“Tracing funds through coin mixing significantly increases complexity, but does not guarantee full anonymity,” Dan Dadybayo, research and strategy lead at Unstoppable Wallet, told Decrypt.
Current blockchain analytics tools “leverage pattern recognition, statistical clustering, and timing analysis,” Dadybayo explained.
Through these, investigators could “partially or even fully reconstruct flows in many cases,” though those depend on the “size of the anonymity set and behavior of the actors involved,” he added.
Prosecutors said their investigation used advanced electronic data review to trace the flow of funds, detailing embezzlement, conversion, and laundering. Digital forensics helped trace coin mixing and link offshore exchanges to domestic banks.
Citing local firms such as Salus Security, Beosin, and SlowMist, Dadybayo said Chinese law enforcement has increasingly used blockchain analytics tools in crypto investigations to support asset tracing and AML enforcement.
A total of seven individuals were convicted of occupational embezzlement, receiving prison sentences ranging from three to over 14 years, along with additional fines.
The case exemplifies findings from a whitepaper released by Beijing’s Haidian District prosecutors analyzing 1,253 commercial corruption cases in tech companies from 2020 to 2024.
The report showed a shift from traditional bribery to crypto-enabled fraud, with tactics like data abuse, shell firms, and money laundering.
Sectors like e-commerce and AI were flagged as high-risk due to weak oversight. Feng’s case was among the ten highlighted examples.
