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OKCoin Loses Money Laundering Appeal In Civil Court

by on August 14, 2016

Trouble is brewing for the OKCoin Bitcoin exchange by the look of things. To be more precise, the exchange’s parent company is forced to pay damages for facilitating money laundering. This decision was made by a Chinese civil court a few weeks, but the news only became public yesterday evening.

Given the legal grey area of Bitcoin in China, this civil court ruling does not come as a complete surprise. At the same time, it is the first time a major [civil] court ruling occurs against a Bitcoin exchange operating in the Chinese market. Whether or not this will become the new norm, remains to be seen.

Facilitating money laundering is never a good idea, and OKCoin.cn found that out the hard way. Do not confuse this entity with the Bitcoin exchange itself, as it is registered in Singapore. The parent company has been battling in court over these money laundering allegations for several years.

OKCoin Will Need To Get A Proper Business License

It all started when Huachen Commercial and Trading Co. Ltd. took OKCoin.cn to court. The commercial institution claimed they lost US$1.8m to a hacker, who then used the money to purchase Bitcoin. Once that process was completed, the hacker withdrew funds to Macau. OKCoin.cn appealed this verdict, but their efforts have been futile.

The civil court took exception to how OKCoin is conducting its ID verification. Every exchange platform – Bitcoin or otherwise – requires users to verify their identity. However, the parent company did not perform an adequate job, according to the ruling. Keeping in mind how the criminal in this case managed to set up multiple OKCoin accounts with fake information, the decision can easily be justified.

Note from the Author: OKCoin and other Chinese exchanges have stepped up their KYC and AML game ever since this court ruling in 2014. 

But that is not all, as the OKCoin parent company was found guilty of operating illegally. While the company holds an official license, it doesn’t allow them to [facilitate] trade Bitcoin for profit-making purposes. As a result, the judge ordered the company to get a proper business license.

With the majority of Bitcoin trading volume originating from China, this is not good news by any means.For OKCoin, obtaining the business license they need can be a difficult process. Moreover, this court case may set a precedent for future Bitcoin regulation in China. 

Header image courtesy of OKCoin

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