Extradition of Zhang from Thailand

China has extradited a suspect surnamed Zhang from Thailand. Zhang allegedly led a massive $14 billion pyramid scheme involving cryptocurrency, making him the first financial criminal suspect extradited under the China-Thailand extradition treaty since its implementation in 1999.

China’s Ministry of Public Security announced that Chinese and Thai authorities have formed a special working group called “Hunting Fox” and extradited Zhang to China on Wednesday.

Background on the Scheme

Starting in 2012, Zhang allegedly led a scheme known as “MBI Group.” This scheme lured investors into paying fees ranging from 700 yuan ($98) to 245,000 yuan ($34,300) for membership through cryptocurrency issuance. Authorities reported that the group attracted over 10 million members with promises of high returns, with the funds involved exceeding 100 billion yuan ($14 billion).

Investigation Timeline

According to the police’s announcement, the investigation into Zhang was initiated in November 2020 in Chongqing, a first-tier city in Southwestern China. In March 2021, Interpol’s Chinese branch issued a red notice for Zhang. Subsequently, in July 2022, the police in Thailand arrested him, and a Thai court ruled in May this year to extradite him to China.

Context on Cryptocurrency Regulation in China

China banned cryptocurrency trading activities on the mainland in 2021, though many investors attempted to circumvent these rules. In May, police in China dismantled an underground bank that used the USDT stablecoin for foreign currency exchanges, involving transactions worth at least 13.8 billion yuan ($1.9 billion).

Earlier this week, China’s top legal authorities included the use of cryptocurrencies to facilitate illicit fund transfers as a money laundering method in a judicial interpretation, thus facilitating the investigation and prosecution of crypto-linked money laundering cases.