What happened?
A 31-year-old man surnamed Chen, who lives in Kaohsiung, did not comply with the new registration system for Virtual Asset Service Providers (VASP) and engaged in illegal cryptocurrency exchange business, becoming an illegal individual currency dealer.
In addition to the case of Chen in Kaohsiung, on January 2nd, the Criminal Investigation Bureau also discovered an illegal operation called “Yu-You” currency dealer studio in a commercial office in Taipei City and notified a 42-year-old woman surnamed Lin and a 21-year-old woman surnamed Liu to appear for questioning.
Failure to complete anti-money laundering prevention, service energy registration or logging, while providing virtual asset services, may result in imprisonment of up to two years, detention, or a fine of up to 5 million yuan, or a combination thereof.
The first illegal individual currency dealer discovered after the new law took effect
On November 30th, 2024, Taiwan officially implemented the new registration system for Virtual Asset Service Providers (VASP) under Article 6 of the Anti-Money Laundering Act, which requires cryptocurrency exchanges and individual currency dealers to register in accordance with the law, otherwise they may not provide virtual asset services.
However, according to the Liberty Times, a 31-year-old man surnamed Chen in Kaohsiung did not comply with the regulations and engaged in illegal cryptocurrency exchange business, becoming an illegal individual currency dealer. After investigation by the Second Brigade of the Criminal Investigation Bureau, it was found that since October of last year, Chen has been using Facebook cryptocurrency-related groups to find buyers and provide stablecoin USDT exchange services.
The police pointed out that Chen attracted netizens to conduct cryptocurrency transactions privately through Facebook messages, and once both parties exchanged cash, the transfer of funds was completed. Since December 1st of last year, the police have strengthened the crackdown on illegal currency dealers and found that Chen had conducted over a hundred transactions in less than a month, selling approximately 400,000 USDT with profits exceeding 800,000 yuan.
On December 24th, after collecting evidence, the police went to Chen’s residence and detained him, seizing computers, mobile phones, note counting machines, safes, and Tether coins as evidence. According to the United Daily News, after comparing with the police, it was found that most of Chen’s buyers were online gamers.
Chen was ultimately transferred for prosecution for violating the Anti-Money Laundering Act. After the interrogation by the prosecutor, Chen was temporarily released. This case became the first illegal individual currency dealer case discovered after the new law took effect.
Apart from Kaohsiung, there are also cases in Taipei
The Criminal Investigation Bureau recently conducted a crackdown on unregistered cryptocurrency dealer studios. In addition to the case of Chen in Kaohsiung, on the 2nd of this month, an illegal operation called “Yu-You” currency dealer studio was also discovered in a commercial office in Taipei City, and a 42-year-old woman surnamed Lin and a 21-year-old woman surnamed Liu were notified to appear for questioning. According to the investigation, the studio employed store clerks with a monthly salary of 40,000 yuan to engage in USDT transactions that were 10% higher than the market price.
According to the Liberty Times, the studio accepts cash payments on-site, and then the clerks will contact the buyers to transfer the cryptocurrency to the designated wallet. From December 1st to the time of discovery, the studio completed a total of 328 transactions, with a transaction amount of up to 233.63 million yuan and a net profit of over 20 million yuan.
What is the registration system for cryptocurrency exchange operators?
The “Registration System for Cryptocurrency Exchange Operators” is a policy introduced by the Taiwanese government to strengthen the regulation of the cryptocurrency market and protect consumer rights.
According to this policy, all companies operating cryptocurrency exchange businesses in Taiwan must register with the competent authority (Financial Supervisory Commission). Even operators who are already on the list of compliance declarations must resubmit their registration information and undergo review by the competent authority. Currently, there are 26 operators who are still allowed to provide virtual asset services in accordance with Article 30 of the Regulations Governing Anti-Money Laundering for Businesses or Personnel Providing Virtual Asset Services.
For those who have not completed anti-money laundering prevention, service energy registration, or logging while providing virtual asset services, they may face imprisonment of up to two years, detention, or a fine of up to 5 million yuan, or a combination thereof.