China Explains How It Convicted Crypto ‘OTC King’ Zhao Dong
China revealed details behind the conviction of influential crypto over-the-counter (OTC) trader Zhao Dong, known as the “OTC King.” The OTC King, who is the founder of crypto trading desk RenrenBit, received a 7-year prison sentence for illegal foreign exchange and crypto business operations.
The case underscores China’s ongoing crackdown on cryptocurrency trading, even when facilitated through opaque channels like OTC desks, private chat groups, and stablecoins.
Key Takeaways
- Zhao Dong founded the OTC crypto desk RenrenBit and executed complex trade schemes between Chinese yuan.
- Prosecutors pieced together evidence from bank statements, chat logs, confessions, and more to reveal the flow of funds.
- Zhao argued his actions were only digital currency transactions, not illegal foreign exchange trading.
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Chinese authorities revealed they meticulously followed fund flows moving between Chinese bank accounts, overseas cash pools, and flows of Tether and Bitcoin.
Investigators focused on accounts associated with Zhao Dong along with chat groups used to conduct trades. Authorities used detailed bank records, WeChat conversations, testimonies from Zhao’s OTC agents, and other documentary evidence.
“All defendants admitted that Zhao and others in Dubai collected dirhams in cash, paid RMB to the other party’s designated account, bought Tether with dirhams, and let the domestic gang illegally sell it back for RMB.”
Chinese authorities wrote about the scheme in the report
Crypto OTC King Schemes Involved Foreign Cash, Stablecoins
In one scheme, Zhao allegedly coordinated crypto-fiat trades between Dubai-based entities holding cash piles of UAE dirham and domestic Chinese contacts. During three public court hearings, Zhao argued unsuccessfully that his actions were solely digital currency transactions, not breaching foreign exchange laws.
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Zhao’s 7-year sentence and $325,000 fine were affirmed by the court. The conviction of one of China’s most influential OTC crypto traders underscores the intensity of the regulatory crackdown on cryptocurrency trading in the country.
