The Beijing-based Bitcoin exchange OKCoin was fined for providing money-laundering operations on its platform. The Heilongjiang Provincial Court fined this Chinese exchange and ordered to compensate up to 627,569 Yuan. As per the ruling, OKCoin had flawed AML and KYC policies in pace, which caused irregularities in the identification process. The unknown individual use this gap as an handle of creation several Bitcoin accounts, which then was used to transfer about 12 million Yuan to an unknown bank account in Macau.
The judgment also mentioned that this Bitcoin exchange does not have required licenses to work as a trading platform. The parent firm of OKCoin exchange is registered as technical services, technology development, consulting, and investment management. However, as everybody know that if the company wants to work with online trading activities and payments must be registered in the department of industry and commerce. Therefore, OKCoin does not have this registrations and proper licenses.
The case presided by Judge Wang Yao in the July 14, stated that this Bitcoin exchange has been working illegally and it should offset for almost 40 percent of the aggregated losses incurred by the respondent. The OKCoin exchange has also been blamed for having flawed AML and KYC policies, which in conjunction with incorrect proses of documents verification gave the unknown person or a group of persons a chance to create accounts on the Bitcoin exchange platform using fake identification documents.
Furthermore, Wang Yao has mentioned that China Banking Regulatory Commission, People’s Bank of China, China Securities Regulatory Commission, the Ministry of Industry and Information Technology and China Insurance Regulatory Commission have released a cooperative prevention about the possible risks associated with Bitcoin in the past. It is very important for Bitcoin exchange platforms as OKCoin to strengthen security of their operations to protect exchange from its misuse.
During this investigation, the law enforcement authorities could find the most biggest part of the money. However, the swindlers spent over 1.5 million Yuan. Lekuda, the parent company of OKCoin exchange, now will be paying the fine to spread the largest part of the losses faced by Huachen.
After the several incidents involving cruptocurrency corporations, it is to be seen whether the Chinese government decides to realize any regulations, to change the Bitcoin ecosystem in the country and to promote its adaptation in the near future.