Court Sentences Former Tech Exec for Embezzlement and Money Laundering

A Beijing court sentenced a former technology firm executive to 14 years and six months in prison on Tuesday for embezzling 140 million yuan (US$19.5 million) and laundering the funds through cryptocurrency.

The executive, surnamed Feng, was responsible for approving incentive payouts at a short video platform. Prosecutors revealed that he collaborated with external vendors to submit false claims and reroute corporate funds into accounts under his control. The embezzled money was then converted into Bitcoin and other digital assets across eight overseas trading platforms.

Prosecutor Li Tao highlighted three key features of the case: “petty officials committing major corruption, laundering through virtual currency, and weak enterprise risk awareness,” as reported by People’s Daily and initially cited by South China Morning Post.

To hide the origin of the funds, Feng and his associates used coin mixing techniques—tools designed to obscure blockchain transaction trails by pooling and redistributing cryptocurrency assets. Authorities managed to trace the flow of funds and ultimately recovered over 90 Bitcoin, valued at nearly $11 million at current rates.

“Tracing funds through coin mixing significantly increases complexity, but does not guarantee full anonymity,” said Dan Dadybayo, research and strategy lead at Unstoppable Wallet, in an interview with Decrypt. He explained that current blockchain analytics tools utilize pattern recognition, statistical clustering, and timing analysis.

These advanced methods helped investigators reconstruct financial flows, although the effectiveness depends on the size of the anonymity set and the behaviors of the actors involved.

Prosecutors conducted their investigation using advanced electronic data reviews to trace the funds’ flow, which detailed embezzlement, conversion, and laundering. Digital forensics played a critical role in linking coin mixing to offshore exchanges and domestic banks.

According to experts from local firms such as Salus Security, Beosin, and SlowMist, Chinese law enforcement has increasingly incorporated blockchain analytics tools into crypto investigations to support asset tracing and anti-money laundering (AML) enforcement.

In total, seven individuals were convicted of occupational embezzlement, with prison sentences ranging from three to over 14 years, alongside additional fines.

This case illustrates findings from a whitepaper released by Beijing’s Haidian District prosecutors, which examined 1,253 commercial corruption cases in tech companies from 2020 to 2024. The report identified a shift from traditional bribery to crypto-enabled fraud, employing tactics such as data abuse, shell firms, and money laundering. Sectors such as e-commerce and AI were flagged as high-risk due to insufficient oversight. Feng’s case was among the ten highlighted examples.