New digital yuan run-score scam allows hackers to empty ATMs in China, highlighting money laundering risks. The criminal gang managed to steal over 10 million yuan from more than 900 accounts in just one month. Chinese sources claim that the digital yuan recorded 950 million transactions worth 1.8 trillion yuan in June 2023, with 120 million open wallets.
In recent years, China has actively promoted the adoption of the digital yuan (e-CNY) in pilot regions, praising its security, anonymity and control features. However, with its increasing use, the digital yuan has unintentionally become a tool for illicit activities and scams, with numerous cases of fraud and money laundering in different regions.
On January 9, the Shanghai High Court of Justice unsealed the first case of fraud involving the central bank digital currency (CBDC) in Shanghai. Hackers took advantage of the digital yuan exchange function to quickly empty an ATM within two hours.
“Run-Score” Digital Yuan Scam Comes to Light
Said alarming incident has highlighted the urgent need to review and strengthen the regulatory framework surrounding the digital yuan to curb potential money laundering risks and improve supervisory measures.
In May 2023, Shanghai’s Yangpu district witnessed a planned heist by a hacker named Wang. Using more than ten mobile phone numbers to register digital currency accounts, Wang executed a rapid series of 30 transactions in just a few minutes. two hours, for a total of 123,000 yuan.
Wang’s actions emptied the ATM. The hacker was part of a broader network dedicated to run-score operations, exploiting digital yuan accounts for various illicit purposes.
The group’s leader, Xiao, orchestrated the robberies by coordinating his associates to determine the amounts withdrawn. They obtained the virtual currency from merchants Gong and Huang. Once the associates provided them with digital yuan account details and passwords, they passed them on to “brokers” like Wang. Subsequently, the “runners” withdrew cash from bank branches through ATMs.
Scam Affecting the Digital Yuan
Between May and June 2023, Xiao’s syndicate managed to divert more than 10 million yuan from more than 900 digital yuan accounts. 800,000 yuan came from victims of telecom network fraud.
Hackers are taking advantage of the public’s enthusiasm for digital yuan testing, devising fraudulent schemes to steal personal information and funds. Several regions have reported cases of money laundering related to the digital yuan. In Kunming, a man used digital yuan to purchase gift cards in a remote fraudulent money laundering scheme.
Growing Problems for Digital Yuan Adoption
Experts highlight the need to strengthen anti-money laundering regulations in digital yuan transactions. Current regulatory mechanisms, customer identification protocols and information systems are not sufficient to effectively combat money laundering.
Recommendations include defining the obligations and responsibilities of operating institutions and partners in anti-money laundering efforts, improving suspicious transaction monitoring capabilities, and adopting technological solutions such as smart contracts to improve security and auditing.
Although the digital yuan presents opportunities for illicit activities, its adoption rate appears to be strong. Former PBOC Governor Yi Gang revealed the statistics. Its total transactions reached 950 million with a cumulative value of 1.8 trillion yuan as of June 2023.
The digital yuan’s journey is not without its challenges. Its goals include countering Western sanctions, expanding the adoption of the Chinese currency abroad, and gradually decreasing the dominance of the US dollar.
By Leonardo Perez
