Details of the corruption case involving 140 million yuan in rewards from a short video platform in Beijing have been exposed: Money Laundering with Virtual Money and the revelation of "coin mixing" methods.

With the vigorous development of the digital economy, the means of business corruption are also increasingly upgraded, showing more covert and complex characteristics. Recently, Chinese media revealed a major corruption case that occurred at a short video platform company in Haidian District, Beijing. A former employee of the company, Feng, colluded with external suppliers by taking advantage of his position to illegally siphon off 140 million yuan in rewards from the company through exploiting loopholes in the reward policy and leaking internal data. Even more shocking is that the individuals involved also engaged in money laundering through the registration of shell companies and Virtual Money, and even used "mixing" methods to transfer the illicit funds, attempting to cut off the traceability chain of the capital flow. This case not only reveals a new pattern of business corruption in the digital economy era, but also sounds the alarm for corporate risk prevention and control.

Collusion: The "Criminal Maze" of 140 Million Rewards

Feng is responsible for the entry approval of service providers, the formulation and execution of reward policies, and other tasks at a short video platform company in Haidian District, Beijing. In order to expand business and attract traffic, the company often launches various subsidy policies to encourage service providers to settle in and operators to carry out activities. Such policies are designed by Feng, the rules are explained by him, and the execution process is also supervised by him. Feng has become the key "valve" connecting the company's funding chain with external suppliers.

Driven by increasingly expanding desires, Feng secretly opened a "back door" to the abyss. He conspired with familiar external suppliers, Tang and Yang, to implement a plan to embezzle company assets using his authority. When formulating the new rewards policy, Feng first intentionally "reserved" loopholes, and then continuously leaked internal operational data that should have been kept strictly confidential to Tang, Yang, and others. With the internal data as the "key", external merchants only needed to submit false application materials that met the reward conditions to "attach" the efforts of others under their own names. In just one year, through this hidden "funding channel", the 140 million yuan in rewards that should have been subsidized to service providers and operators was illegally embezzled by Feng and others.

In order to "safely" cash out and transfer these ill-gotten gains, Yang instructed several subordinates, including Wang, to quickly sign up for multiple "shell companies". These companies had only one function, which was to receive the "rewards" paid by the short video platform company. Once the "rewards" were credited, they would be rapidly transferred in layers, eventually funneling into a hidden account actually controlled by Yang.

Money Laundering of Virtual Money and "Coin Mixing" Techniques: Challenges of High-Tech Crime

With 140 million dollars in ill-gotten gains in hand, how to "safely" distribute the spoils and cover up their illegal origins? Feng instructed Tang and Yang to use 8 different overseas Virtual Money trading platforms to convert the massive funds obtained through deception into Bitcoin and other Virtual Money in batches.

However, this is just the first step. In order to completely cut off the traceability of the flow of funds, Feng's gang adopted a more secretive "mixing" method, which confuses the cryptocurrency transaction paths through technical means to achieve "privacy" protection. Through "mixing", Feng further obscured the source, type, and flow chain of the virtual money. Ultimately, some of the funds involved that were "laundered" were exchanged back into RMB through hidden channels, flowing into the personal or corporate accounts actually controlled by Feng, Tang, Yang, and other core members. A "money laundering chain" utilizing high-tech means and crossing national borders has thus completed its closed loop.

Electronic Data Review: The Key to Unraveling the Criminal Maze

Facing such complex criminal methods, Prosecutor Li Tao of the Haidian District People's Procuratorate's Technology Crime Prosecution Team quickly established a "three-in-one" evidence system of information flow, data flow, and capital flow, relying on the electronic data review room. This system not only corroborated the authenticity and credibility of each other's evidence but also fully presented the "crime maze" constructed by Feng, clearly restoring the process of 140 million yuan being embezzled, transferred, laundered, and distributed.

In the face of such irrefutable evidence, Feng's gang had no choice but to hand over the more than 90 hidden bitcoins, allowing the company to recover some losses. Ultimately, Feng and six others were sentenced by the Haidian District People's Court to prison terms ranging from fourteen years and six months to three years for the crime of embezzlement, along with corresponding fines. The verdict is currently in effect.

Preventing Commercial Corruption Risks: A Joint Challenge for Enterprises and Regulators

"The three notable characteristics of this case are 'small officials with big corruption', Money Laundering through Virtual Money, and a relatively weak awareness of enterprise risk management." In Li Tao's view, current business corruption behaviors are continuously 'evolving', from previously unconscious crimes 'evolving' to often being premeditated, involving resistance during the act, and having 'alliances of offense and defense' afterward, culminating in a complete investigation strategy that utilizes Money Laundering through Virtual Money.

In addition, some companies tend to concentrate power in the hands of specific business managers due to their focus on development strategies, resulting in a short approval chain and an increasing risk of business corruption. "In the past five years, the number of business corruption cases we have handled has shown an upward trend. On one hand, the increase in the number of cases is closely related to enterprises gradually realizing the importance of anti-business corruption and strengthening internal anti-corruption efforts; on the other hand, it also indicates that the necessity and urgency of anti-business corruption are becoming greater and greater," introduced Peng, head of the Second Prosecution Department of the Haidian District People's Procuratorate. Especially with the development of the digital economy and platform economy, corporate management methods and operational processes, involving aspects such as traffic promotion, user growth, data analysis, and market research, have become frequent and high-incidence areas for business corruption crimes in the internet industry. In terms of criminal scenarios, "traffic monetization" and "data rights" in the e-commerce field are gradually becoming new scenes of business corruption. E-commerce operational services involve the allocation and management of platform resources, such as the setting of recommendation positions on live streaming platforms and the ranking of stores on e-commerce platforms, where there is room for power rent-seeking in areas such as store introduction, resource investment, and illegal control of reviews.

"These acts of commercial corruption not only distort the fair competition order of the market and harm the legitimate interests of enterprises, but also damage innovation and creativity." Jiang Shuzhen, Secretary of the Party Group and Chief Prosecutor of the Haidian District People's Procuratorate, introduced that in recent years, the Haidian District People's Procuratorate has, on one hand, strictly punished commercial corruption crimes according to the law, timely pursued prosecution for overlooked crimes discovered during investigations, and accurately assessed legal supervision clues obtained from multiple channels; on the other hand, it has innovatively explored the "dual reporting" work mechanism for enterprises, preempting the legal supervision process, providing companies with the service of reporting cases while applying for procuratorial supervision intervention, and has also launched an exclusive service platform for enterprises - the "Jianqi Zhiyuan" mini program, offering practical suggestions and follow-up visits, and actively building a diversified governance system in cooperation with other administrative and judicial agencies.

Beware of the 5 main traps of business corruption:

Commercial corruption mainly refers to the acts of harm to corporate interests committed by personnel related to enterprises using the convenience of their positions. The crimes are mainly divided into two categories: one category is property-related crimes, generally involving charges such as embezzlement and misappropriation of funds; the other category is crimes that disrupt the socialist market economy order, which includes commercial bribery crimes and other crimes that infringe on the interests of companies and enterprises using the convenience of their positions, involving charges such as bribery of non-state personnel and infringement of trade secrets. Cases of commercial corruption mainly present the following 5 patterns:

1. Using inflated transaction links to achieve "empty hands catching the wolf": The perpetrator uses their responsibilities such as negotiating business, consulting cooperation, signing agreements, and confirming transaction prices without company authorization, to artificially increase the company's procurement costs or reduce the company's sales profits through inflated intermediary links.

2. False reporting of labor expenses, service fees, and other "eating empty wages" methods have been renewed: As labor outsourcing and labor dispatch models become increasingly common in the employment sector, the number of employment links has increased, making it difficult to audit related expenses. The employing party and the labor dispatch party can easily collude, exploiting management loopholes to create risks of commercial corruption.

3. Fabricating false appearances of "loans" and "dividends" in an attempt to disguise profit transfers with a legal facade: Criminals intentionally intertwine and confuse transactions of money and power with ordinary civil actions. Some disguise their actions under the banner of private lending, while others mix them with investment, cooperation, and other commercial activities, presenting profit transfers in a marketized "disguise" and packaging illegal actions as "legal" activities.

4. Power rent-seeking is accompanied by technological information and data infringement crimes: In cases of commercial secret infringement crimes, the personnel involved generally hold core technical positions or senior management positions, having job convenience to access the company's core technological information or business information. While seeking power rents, they often infringe on the company's commercial secrets.

5. The Intertwining of Commercial Corruption Crimes and Tax-related Crimes: In cases of embezzlement, perpetrators generally adopt fictitious contracts to siphon off company funds, which are subsequently funneled back into their personal accounts for personal gain. Commercial corruption crimes are often accompanied by tax-related illegal activities.

The exposure of a corruption case involving 140 million yuan in a short video platform in Beijing once again reminds us that while the digital economy is rapidly developing, the risk of business corruption is also increasing. In particular, the application of virtual money provides new channels for criminals to engage in Money Laundering. The prosecution authorities remind that enterprises need to strengthen risk prevention and control, and establish mechanisms to prevent and govern corruption from the source. This is not only necessary to protect the interests of the enterprises themselves, but also an important guarantee for maintaining fair competition in the market and promoting the healthy development of the digital economy.